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# Yield to Maturity, Interest Rate, Longer Maturity or Higher Coupon Rate

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In determining the yield to maturity on a bond at a given interest rate, you get a value below the current market price, in the next calculation should you use a higher or lower interest rate or a longer maturity or higher coupon rate?

#### Solution Preview

You used a 'given' interest rate and you found out that the bond price that you calculated is below the actual market price. You can use a lower interest rate or a higher coupon rate. Explanation is below:

1) Interest Rates:
Keep in mind that bond prices and interest rates are inversely related. Thus, greater the interest rates, lower the bond prices and ...

#### Solution Summary

This solution discusses the effect of interest rates, time to maturity and coupon rate on the price of the bond in 250 words.

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