Table 17‐2 shows prices for a 10 percent coupon bond for market yields from 6 to 14 percent and for maturity dates from 1 to 30 years. For any given maturity, if we move from the 10 percent level, the price of the bond declines as the required yield increases and increases as the required yield declines. Figure 17‐5 shows the convex relationship that exists between bond prices and market yields using data from Table 17‐2 for a 10‐year maturity bond.

Table 17‐2

Figure 17‐5

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Table 17-2 Bond Prices at Different Market Yields and Maturities for a 10 Percent Coupon Bond Time to Maturity I 5 10 15 20 25 30 6% $1,038.27 1,170.60 1,297.55 1,392.01 1,462.30 1,514.60 1,553.51 8% $1,018.86 1,081.11 1,135.90 1,172.92 1,197.93 1,214.82 1,226.23 10% $1,000 1,000 1,000 1,000 1,000 1,000 1,000 12% $981.67 926.40 885.30 862.35 849.54 842.38 838.39 14% $963.84 859.53 788.12 751.82 733.37 723.99 719.22