Bond Valuation and Analysis in Python

Overview

Learn how bonds work and how to price them and assess some of their risks using the numpy and numpy-financial packages.

The world’s bond market has a value of around 120 trillion dollars; it plays a key role in helping both governments and businesses raise capital and is an essential part of most investment portfolios. In this course, you’ll gain the essential skills needed to work in the financial, insurance, and accounting industries, including understanding and analyzing markets. Through hands-on activities, you’ll discover how bonds work, how to price them, and how to assess some of their risks using numpy and numpy-financial packages.

Syllabus

Time Value of Money

In this chapter, you’ll cover simple and compound interest, compounding frequencies, future value as well as commonly used financial functions in the NumPy-financial package.

Bond Prices & Yields

Let’s get fiscal. You’ll discover how to find the price of both zero-coupon and coupon-paying bonds, as well as examining the relationship between bond prices and bond yields.

Duration

Now it’s time for you to explore interest rate risk via the concept of duration, the factors affecting duration, and how to use duration to predict the price changes of a bond or hedge bond portfolios.

Convexity

In the final chapter, you’ll be introduced to convexity. You’ll see how it helps address the weaknesses inherent in duration, examine the factors affecting convexity, and use both duration and convexity together to better predict bond prices.