Bonds
Lending, priced.
Bonds are the promise instrument. Everything about them — coupon, yield, duration, credit — flows from the promise's terms and the market's assessment of the promiser.
You will finish able to compute yield to maturity by hand and construct a ladder that matches your reserves' duration.
- 01
Compute yield to maturity.
- 02
Distinguish credit risk from duration risk.
- 03
Build a bond ladder.
- — 201 — Investing Foundations.
1–2 weeks · ~5 hours.
- IModule · ~2 hours.
The instrument
A promise to pay, with a coupon.
A bond is a small contract with three moving parts: coupon, price, and time. This module makes the arithmetic routine.
What You Will Be Able To Do- — Compute yield to maturity.
- — Explain why price and yield move opposite.
- — State duration in years and interpret it.
Why hereDuration is the concept most household investors miss and the one that moves portfolios most.
- IIModule · ~1.5 hours.
The bond market
Sovereign, corporate, municipal, high-yield.
The bond market is not one market but a set of related ones. Each has its own risks and its own uses.
What You Will Be Able To Do- — Compare Treasuries, corporates, and munis.
- — Read a credit rating without treating it as truth.
- — State a tax-adjusted yield.
Why hereThe right bond for a household is a joint function of tax bracket, duration need, and credit tolerance.
- IIIModule · ~1.5 hours.
Portfolio construction
How bonds actually sit next to stocks.
How bonds sit next to stocks — laddered, funded, or held to maturity — is an operational decision, not a theoretical one.
What You Will Be Able To Do- — Build a bond ladder.
- — Choose fund versus individual holdings defensibly.
- — Rebalance without paying to.
Why hereThe construction step is where the theory becomes the household's income stream.
Households that treat bonds as 'the safe part of the portfolio' without understanding duration were badly educated in 2022. This course corrects that.