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Whats the difference between a coupon rate and a yield (yield to maturity)? How do these rates affect the price of a bond? Can a
- Whats the difference between a coupon rate and a yield (yield to maturity)? How do these rates affect the price of a bond? Can a bond ever sell for less than its face value? With words (about 6-8 sentences) and with Excel examples demonstrate the 3 possible relationships between the coupon rate and the yield and the subsequent impact on bond price:
- coupon = yield
- coupon > yield
- coupon < yield
Assume semi-annual payments and 7% coupon rate when you do the examples.
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