What is the relationship between price and yields for fixed income securities? There is a government bond
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Question:
What is the relationship between price and yields for fixed income securities? There is a government bond with a par value of $1000, and %4 semi- annual coupon rate. The bond was issued 6 years ago when the market interest rates are 8%. (The yield to maturity is %8). The remaining maturity of this bond is 1,5 years. Make comment about the price of this bond. a- If somehow, the market interest rates remain unchanged (ytm unchanged) b- If the market interest rates rise (ytm goes up) c- If the market interest rates go down. (ytm goes down
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