16. How to use a Bond Calculator

Videos
Download Preston’s 1 page checklist for finding great stock picks: http://buffettsbooks.com/checklist

Preston Pysh is the #1 selling Amazon author of two books on Warren Buffett. The books can be found at the following location:

In this lesson, students learned how to apply the BuffettsBooks.com bond calculator. We learned that as interest rates increase, the value of a bond decreases. Similarly, when interest rates decrease, the value of a bond decreases.

When using the bond calculator, it becomes evident that the term of the security changes as it approaches the maturity. Since a premium or discount paid for a bond cannot be recuperated through coupon payments, short term bonds are less affected by changes in interest rates compared to long term bonds. This idea of changing interest rates can be taken advantage of by intelligent investors if they purchase high yielding long term bonds. In order to find a high yielding, long term bond, an investor can implement the ideas learned in lesson 3 of this unit.

Articles You May Like

3 Biotech Stocks With Blockbuster Potential
7 Stocks That Could Be the Next $2 Trillion-Dollar Companies
Rally Alert: Nvidia’s Stock Defies Gravity, But Can It Keep Rising?
Stocks making the biggest moves midday: Abercrombie & Fitch, Palo Alto Networks, Moderna and more
TipRanks reveals the top 10 consumer goods sector analysts of the past decade