Let's suppose that after the coupon rate for a particular bond is set at 10%, the rate of interest required by investors for bonds of a similar risk shoots up to 13.5%. At what price would the bonds sell? We'll assume that it's another 5-year, semiannual payment bond. Begin by laying out cash flows: Cash Flows for Think about what information we've YTM = 13.5% got and what it is we're trying to solve for. We have a number of even Inflow Outflow payments, a known future payment, 1/1/9V ? and a known interest rate. We are solving for the present value. In plain 6/30/9V (50) English, we want to know how much 12/31/9V (50) someone would be willing to pay for 6/30/9W (50) a predictable stream of future cash 12/31/9W (50) receipts if they could earn 13.5% 6/30/9X interest on their money elsewhere (50) and incur the same level of risk. 12/31/9X (50) 6/30/9Y (50) 12/31/9Y (50) 6/30/9Z (50) 12/31/9Z (1050)