Lecture 1, Part III: Bond “Mathematics”

This segment by Vasily Strela provides an explanation of interest rates, bonds, and their fundamental role in finance. It covers key concepts such as compound interest, discounting future cash flows, zero-coupon and coupon bonds, and the inverse relationship between bond prices and yields. The discussion also explores yield curves, their historical shapes, and how they can signal economic recessions, emphasizing the importance of understanding bond price sensitivities through measures like duration and convexity for effective fixed-income investing.