Ever wondered why bond prices fall when interest rates rise? Or how to actually calculate Yield to Maturity (YTM) without feeling lost in formulas?
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In this detailed Part 2 session, Ashish Jain breaks down the concept of YTM, Bond Valuation, Current Yield, Rate of Return and important bond pricing theorems, all in a clear bilingual (Hindi-English) style.
This video is especially useful for:
- Bankers attempting JAIIB for the first time
- Students struggling with the AFM module
- Anyone looking to master bond calculations in a simplified way
👉 So grab your calculator, hit play on the video below, and don’t forget to drop your questions in the comments. Let’s crack it together! 💪
🎥 Watch the Full Video
👉 Before we dive in, watch this video for a complete breakdown:
🕒 00:00 – Welcome & Recap
Quick recap of Part 1 with a reminder to save 836094207 and WhatsApp “SAVE FOR JAIIB” to get FREE PDFs.
💰 00:29 – Understanding Semiannual Bond Calculations
- Divide coupon rate by 2
- Multiply tenure by 2
- Divide required rate by 2
Use PV = Coupon × PVIFA + FV × PVIF
📉 03:22 – Full Numerical: Present Value of Bond
Example: ₹10,000 FV, 10% CR, 3 years, 8% return
Answer: ₹10,524
Tip: If Coupon > Required Rate → Bond sells at Premium
🔍 06:08 – What is Current Yield?
Formula: Current Yield = (Annual Coupon / Market Price) × 100
Example: ₹100 / ₹850 = 11.76%
💹 08:57 – Total Rate of Return = Coupon + Capital Gain
Return = (Coupon + Capital Gain) / Purchase Price × 100
Example: (₹60 + ₹20)/₹1020 = 7.84%
📏 11:20 – What is YTM?
YTM is the discount rate at which the PV of all future cash flows equals the bond’s market price.
Solved using hit & trial + interpolation
🔢 15:29 – YTM Numerical (Hit & Trial Method)
Example: ₹1,000 FV, ₹850 CMP, ₹80 Coupon, 9 years
Try 10% → ₹884.72; 12% → ₹787.26
YTM = 10% + [(884.72 – 850)/(884.72 – 787.26)] × 2 = 10.71%
📚 20:43 – Bond Pricing Theorems
- ROR = Coupon → PV = FV
- ROR > Coupon → PV < FV (Discount)
- ROR < Coupon → PV > FV (Premium)
- Discount/Premium reduces as maturity nears
- Bond price ∝ Inversely to interest rate
- Longer tenure = Greater sensitivity to rate changes
✅ Conclusion
You’ve just mastered some of the most important topics in the AFM syllabus – from YTM to bond valuation tricks.
🔁 Re-watch, practice, and apply this knowledge to mock tests.
💬 Drop your questions in the comments & don’t forget to subscribe and share with your peers.
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