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    Change in price, yield due to change in interest rates

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    A 10-year Treasury bond is issued with a face value of $1,000, paying interest of $60 a year. If market yields increase shortly after the T-bond is issued, what happens to the bonds:

    A) coupon rate?
    B) price?
    C) yield to maturity?

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    Solution Preview

    A. Coupon Rate - Coupon rate remains fixed for the life of the bond and does not change.

    B. Price - If ...

    Solution Summary

    The solution explains how the coupon, price and yield on a treasury bond will change when market interest rate changes in approximately 89 words.