Only time value of money to consider.

Where is the strike price?..Incomplete question....

A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing.

The Federal government, states, cities, corporations, and many other types of institutions sell bonds.

Generally, a bond is a promise to repay the principal along with interest (coupons) on a specified date (maturity). Some bonds do not pay interest, but all bonds require a repayment of principal.

When an investor buys a bond, he/she becomes a creditor of the issuer. However, the buyer does not gain any kind of ownership rights to the issuer, unlike in the case of equities.

IRS is interest rate exchange of benefits between 2 counter parties with comparative advantage.

An exchange of interest payments on a specific principal amount.

This is a counterparty agreement, and so can be standardized to the requirements of the parties involved.

An interest rate swap usually involves just two parties, but occasionally involves more.

An exchange of two assets. For example, one type of asset swap is the exchange of a fixed asset, such as a Treasury Bond with fixed and guaranteed payments, for a floating asset such as an index fund, which does not have a fixed or guaranteed return. Asset swaps are done most often in order to achieve a more favorable payment stream, and typically involve debt obligations.

A measurement of one investment or financial instrument's value relative to another's.

For example, an investor may want to compare the financial ratios of two different stocks to determine which stock will be purchased.

The investor is determining the value of one stock relative to another.

Yield-to-maturity

10y 5% coupon bond

Bond duration, in the broadest sense, is the amount of time that must pass before a bond issue reaches maturity.

Within this process, close attention is paid to the actual worth of the bond as it moves toward maturity.

Calculating the value duration of a bond is relatively simple when the rate of interest applied is fixed, although determining the current value of a variable rate bond at a specific point in the maturation process is not particularly difficult.

A bond which pays no coupons, is sold at a deep discount to its face value, and matures at its face value.

A zero-coupon bond has the important advantage of being free of reinvestment risk, though the downside is that there is no opportunity to enjoy the effects of a rise in market interest rates.

Also, such bonds tend to be very sensitive to changes in interest rates, since there are no coupon payments to reduce the impact of interest rate changes.

In addition, markets for zero-coupon bonds are relatively illiquid.

Under U.S. tax law, the imputed interest on a zero-coupon bond is taxable as it accrues, even though there is no cash flow.

Means one or more than one future events. Were the value of those may be positive or negative (or ) in general terms low returns than expected .

There are mainly three types of Risks:
1) Credit Risk
2) Operational Risk
3) Market Risk

others are

liquidity risk, interest rate ,foreign exchange risk, country risk, insolvency risk,
Off balance-sheet risk , technology risk, diversifiable and non-diversifiable risk

The risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. Credit risk arises whenever a borrower is expecting to use future cash flows to pay a current debt. Investors are compensated for assuming credit risk by way of interest payments from the borrower or issuer of a debt obligation.

Discount FActor = percentage at which you discount the estimated cash flows to calculate the NPV of an asset. Zero coupon bond price is priced at a discount when issued and matures at the par value.

The longer maturities are the riskiest. Here the duration /price sensitivity of interest rate instruments is greatest, and the instruments most illiquid.

in FI finance, it's coming up with zero rates or par yields that are associated with certain time periods not quoted in the typical yield curve.

Typical:
3M
6M
1Y
2Y
5Y
10Y
20Y
30Y

interpolation finds rates between these time periods. can be linear, but cubic spline is the most popular.

Here is an interesting video on Non-Linear interpolation (more info here)