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Python for Finance

You're reading from   Python for Finance Apply powerful finance models and quantitative analysis with Python

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Product type Paperback
Published in Jun 2017
Publisher
ISBN-13 9781787125698
Length 586 pages
Edition 2nd Edition
Languages
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Author (1):
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Yuxing Yan Yuxing Yan
Author Profile Icon Yuxing Yan
Yuxing Yan
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Table of Contents (17) Chapters Close

Preface 1. Python Basics FREE CHAPTER 2. Introduction to Python Modules 3. Time Value of Money 4. Sources of Data 5. Bond and Stock Valuation 6. Capital Asset Pricing Model 7. Multifactor Models and Performance Measures 8. Time-Series Analysis 9. Portfolio Theory 10. Options and Futures 11. Value at Risk 12. Monte Carlo Simulation 13. Credit Risk Analysis 14. Exotic Options 15. Volatility, Implied Volatility, ARCH, and GARCH Index

Chapter 5. Bond and Stock Valuation

Bond or fixed income securities and stock are two widely used investment vehicles. Thus, they deserve a thorough discussion. Before touching upon bond or stock valuation, we have to discuss interest rate and its related concepts, such as Annual Percentage Rate (APR), Effective Annual Rate (EAR), compounding frequency, how to convert one effective rate to another one, the term structure of interest rate, how to estimate the selling price of a regular bond, how to use the so-called discount dividend model to estimate the price of a stock, and so on. In particular, this chapter will cover the following topics:

  • Introduction to interest rates
  • Conversion between various effective rates, APR
  • The term structure of interest rates
  • Bond evaluation and YTM
  • Credit rating versus default spread
  • Definition of duration and modified duration
  • Stock evaluation, total returns, capital gain yield, and dividend yield
  • A new data type – dictionary
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