Debt Yields and Pricing: Rapid Fire

What this video covers

• Why nominal yield (coupon yield) never changes after issuance, and what actually moves when market interest rates shift
• How to rank the four yields (nominal, current yield, yield to maturity, and yield to call) on both discount and premium bonds, including the par case where all four are equal
• When a registered representative must quote yield to call versus yield to maturity for a callable bond, and the issuer incentive logic behind each
• How the $1,000 par value acts as a magnetic pull toward maturity for every bond, regardless of premium or discount purchase price
• Which combination of maturity and coupon produces the most volatile bond price, and why a 30-year zero-coupon bond swings the most
• The day-count memory aid for accrued interest: corporate and municipal bonds use 30/360, government bonds use actual/actual
• Why a one-notch downgrade from BBB- to BB+ triggers forced selling, and the distinction between investment grade and non-investment grade (junk)
• How original issue discount (OID) creates phantom income taxed annually, and the elective versus mandatory rules for premium amortization