Financial Institutions Markets and Money
Quiz 5: Bond Prices and Interest Rate Risk
The Coupon Rate May Be the Market Rate of Interest
The coupon rate may be the market rate of interest for a bond.
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The price of a bond and the market rate of interest are inversely related.
The price of a bond is the present value of future payments discounted at the coupon rate.
Yield to maturity assumes reinvestment of coupons at the same yield.
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