This monologue podcast is a lecture on fixed income and bond trading, delivered to a finance class. The lecture begins with informal discussion about a Taylor Swift concert, then transitions to a detailed explanation of the term structure of interest rates, including yield curves, spot curves, and zero rates. The instructor explains how to calculate zero rates using bootstrapping, a method for determining the theoretical rates of zero-coupon bonds. The lecture concludes with a group exercise applying bootstrapping to calculate zero rates for several bonds, highlighting the importance of clear and traceable calculations in financial modeling. A key takeaway is the concept of arbitrage opportunities, where discrepancies in pricing allow for riskless profit.
