The example illustrates the concept about price risk and reinvestment risk. Assume you purchase a four-year annual coupon bond that pays $100 each year, has a yield to maturity of 10% and has a face value of $1,000. Suppose the yield for the same bond jumps to 12% one day after your purchase, and remains at 12% till maturity. What will be your return if you hold your bond for only one day? What will be your annualized rate of return if you hold it till maturity?