I am having hard time understanding the concept of Horizon Yield, Price Trajectory and carrying value (Start of readin 55). can somebody please expalin it in simple language to me?
The horizon yield is the yield expected (or achieved) for a particular investor’s investment horizon; i.e., it’s their holding period yield.
The price trajectory is the time series of a bond’s prices from some date (usually the date that the bond is purchased) until the bond’s maturity. We frequently talk about the price trajectory for a constant YTM: we see prices in this trajectory when we amortize a bond’s price from the date we purchase it or issue it until the date when it matures. (You see this in FRA.)
The carrying value is the value on our balance sheet at which we show a bond we have purchased (and designated as Held-to-Maturity) or a bond we have issued. (Again, you see this in FRA.)
Carring value = Book Value ?
Yes.