Bonds & Fixed Income

A bond is a loan split into tradeable pieces: the issuer promises coupons and a redemption payment, and the price is the discounted present value of those cashflows. Yield summarizes return if coupons are reinvested and the bond is held to maturity; duration measures price sensitivity to rates, and convexity corrects the linear approximation. The rates curve (yields across maturities) is the pricing kernel of finance: it discounts everything from swaps and mortgages to DCF valuations, and it is bootstrapped from the bonds and money-market instruments in the next group.