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ond Tutor is a visual and interactive presentation of the theory of fixed income securities.   It covers the principles of time value of money, bond valuation, the term structure of interest rates, forwards and futures, and hedging interest rate risk.  It began as a set of lecture notes in courses we taught to MBA and undergraduate students on trading and financial markets at Carnegie Mellon University.

Besides the revision and addition of material, what is unique about this version is that the software is directly integrated into an online textbook, creating what we call an interactive textbook.  In the text, you will see "Interactive Calculators" in the live screens.  In any of these calculators, you can change the numbers and see the results visually and numerically.  This ability to experiment gives you an intuitive grasp of the theory beyond just numbers and equations.

We have also added “real world” calculators that let you see how the concepts are applied in today’s markets. For example, the "Treasury Yield Curve" topic shows you the current yield curve (including the zero curve and forward curve), and we also discuss some of the major drivers of these curves. The underlying data is updated daily so the curves are always current. The “Interest Rate Trends” shows you recent trends in interest rates, including moving averages and volatility bounds. The “Inflation Expectations” topic shows you trends in inflationary expectations derived from interest rates, while the “TIPS (Real Rates)” topic provides another important source of information because the prices of TIPS are sensitive to the current outlook for the US economy.

We welcome comments and suggestions. If there are topics you would like to see covered or enhancements to the calculators, please let us know. You can submit these comments at the Bond Tutor blog site.

John O'Brien and Sanjay Srivastava