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Bond, Price, Coupon Rate and Yield to Maturity

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A 1-year Corporate bond is issued with a face value of $100,000, paying interest of $2,500 semi-annually.

If market yields decrease shortly after the T-bond is issued, what happens to the bond's:

Price

Coupon Rate

Yield to Maturity

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Solution Summary

The solution explains the impact on coupon rate, price and YTM of a bond due to a change in market yield

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Price - The price of a bond has an inverse relationship with the interest rates. If the market yields decrease after the issue, the price of the bond will increase. This happens ...

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