证券基础知识——与bond相关的几个知识点discount factor，Spot rates，forward rates

Fundamentals of bond valuation

The value (or price) of any financial asset-such as a bond-can be determined by summing the asset's discounted cash flows. There are three steps in the bond valuation processes:

1. Estimate the cash flows. For a bond, there are two types of cash flows: (1) the annual or semiannual coupon payments and (2) the recovery of principal at maturity, or when the bond is retired.

2. Determine the appropriate discount rate. The approximate discount rate is either the bond's yield to maturity (YTM) or a series of spot rates.

3. Calculate the PV (present value) of the estimated cash flows. The PV is determined by discounting the bond's cash flow stream by the appropriate discount rate(s).

 

(Bond valuation in wiki -- is the determination of the fair price of a bond. As with any security or capital investment, the theoretical fair value of a bond is teh present value of the stream of cash