GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Issue Price
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Coupon Rate
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Interest Amount
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Redemption Value
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Detailed explanation-1: -As the price of the bond changes, the yield to maturity of the bond will inversely change.
Detailed explanation-2: -As interest rates rise, the YTM will increase; as interest rates fall, the YTM will decrease. The complex process of determining yield to maturity means it is often difficult to calculate a precise YTM value.
Detailed explanation-3: -The yield and bond price have an important but inverse relationship. When the bond price is lower than the face value, the bond yield is higher than the coupon rate. When the bond price is higher than the face value, the bond yield is lower than the coupon rate.
Detailed explanation-4: -Yield to maturity It considers the following factors. Coupon rate-The higher a bond or CD’s coupon rate, or interest payment, the higher its yield. That’s because each year the bond or CD will pay a higher percentage of its face value as interest. Price-The higher a bond or CD’s price, the lower its yield.