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Bond, Price, Coupon Rate and Yield to Maturity

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:


Coupon Rate

Yield to Maturity

Solution Preview

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 ...

Solution Summary

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