Bond Prices versus Yields a. What is the relationship between the price of a bond and its

Question:

Bond Prices versus Yields

a. What is the relationship between the price of a bond and its YTM?

b. Explain why some bonds sell at a premium over par value while other bonds sell at a discount. What do you know about the relationship between the coupon rate and the YTM for premium bonds? What about for discount bonds for bonds selling at par value?

c. What is the relationship between the current yield and YTM for premium bonds for discount bonds for bonds selling at par value?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...