Bond Pricing Quant Interview Guide
Bond pricing quant interview guide covering cash flows, discount factors, yield, price-yield relation, accrued interest, and examples.
Candidates preparing for discounting, coupon, and yield questions.
Price is present value of cash flows
Bond pricing begins by listing coupon and principal payments, then discounting each cash flow using the appropriate rate or discount factor.
Price and yield move inversely
For a standard fixed-rate bond, higher yields imply lower prices and lower yields imply higher prices, all else equal under the same conventions.
Concrete example
A zero-coupon bond paying 100 in one year is priced as 100 divided by one plus the one-year yield under the stated compounding convention.
Curve pricing is more detailed
A full curve approach discounts each cash flow at its maturity-specific discount factor instead of using one yield for every payment.
Common mistakes
Candidates often forget accrued interest, coupon frequency, or day count. Clarify conventions before doing arithmetic or comparing quoted prices.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.