If the coupon rate of a bond increases, the yield-to-maturity and current yield will increase. However, the face value and market value of the bond will not be directly affected.
If the coupon rate of a bond increases, the yield-to-maturity will increase. The yield-to-maturity is the total return thatwill be earned by an investor who buys the bond and holds it until it matures. When the coupon rate increases, the bond will pay a higher amount of interest relative to its price, which will lead to a higher yield-to-maturity.
The current yield of a bond, which is the annual interest payment divided by the bond's market price, will also increase when the coupon rate increases. This is because the bond's interest payment is a fixed percentage of its face value, and when the coupon rate increases, the bond's market price is likely to decrease, causing the current yield to increase.
On the other hand, the face value and market value of the bond will not be directly affected by changes in the coupon rate. The face value is the amount that will be repaid to the bondholder at maturity, and the market value is the current price at which the bond can be bought or sold in the market. These values are determined by factors other than the coupon rate, such as market conditions, interest rates, and the bond's credit rating.