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A bonds price and its yield to maturity are inversely related because:________.

User MDrollette
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Answer: increase in the yield to maturity will lower a bond's coupon rate and hence its price.

Step-by-step explanation:

The yield to maturity is the percentage of return that'll be paid on a bond as long as the investor holds the security till it matures.

It should be noted that the price of a bond moves inversely with the yield to maturity as a rise in the yield to maturity leads to a reduction in the bond's price and a reduction in the yield to maturity will bring about increases in price of a bond

User Kuvo
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