Inflation-Linked Bonds by Hand: Index Ratios, Adjusted Principal, Real Yields, Breakeven Inflation & Deflation Floors
Understand bonds that grow with prices. You will build index ratios from a fictional price index with a lag, adjust principal and coupons, price the bond from a real yield, compare it with a nominal bond through breakeven inflation, test deflation floors and inflation scenarios, with every cell checked as you go.
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About this course
In this course you calculate an inflation-linked bond step by step with a fictional price index. You look up the lagged index for a settlement date with EDATE and XLOOKUP and interpolate it by the day, build rounded index ratios and the adjusted principal, and pay coupons on that principal. You price the bond from its real cash flows with NPV, back out the real yield with IRR and convert a quoted price into a settlement amount. Then you compute breakeven inflation against a nominal bond, test a deflation floor with MAX, run low, base and high inflation paths with POWER and IRR, and review the real income of a small bond mix with a chart.
Lessons
- Price Indices and Lags: The Reference Index for Any Date Pro
- Index Ratio and Adjusted Principal: How the Principal Grows Pro
- Coupons: Real Coupon × Adjusted Principal Pro
- Real Yield and Price: Discounting Real Cash Flows Pro
- Breakeven Inflation: Nominal vs Inflation-Linked Pro
- Deflation Floors: Getting at Least Par Back Pro
- Inflation Scenarios: Linker vs Nominal Bond Returns Pro
- Portfolio View: Real vs Nominal Income and Inflation Sensitivity Pro