What is the relationship between yield, price and modified duration of a coupon bond?

Asked by Last Modified  

9 Answers

Follow 0
Answer

Please enter your answer

Learn Biology from an Expert

Two basic yield measures for a bond are its coupon rate and its current yield. Par value Annual coupon Coupon rate = Bond price Annual coupon Current yield
Comments
Dislike Bookmark

1)Bond prices and bond yields move in opposite directions. -- As a bond’s yield increases, its price decreases. -- Conversely, as a bond’s yield decreases, its price increases. 2)For a given change in a bond’s YTM (Yield to maturity), the longer the term to maturity of the bond, the greater the...
read more
1)Bond prices and bond yields move in opposite directions. – As a bond’s yield increases, its price decreases. – Conversely, as a bond’s yield decreases, its price increases. 2)For a given change in a bond’s YTM (Yield to maturity), the longer the term to maturity of the bond, the greater the magnitude of the change in the bond’s price. Modified duration is the approximate percentage change in a bond's price for a 100 basis points change in yield, assuming that the bond's expected cash flow does not change when the yield changes. read less
Comments
Dislike Bookmark

When price goes up, yield goes down and vice versa. Technically, you'd say the bond's price and its yield are inversely related.
Comments
Dislike Bookmark

Modified duration is a modified version of the Macaulay model that accounts for changing interest rates.
Comments
Dislike Bookmark

Tuitions upto Grade 10, Web/App Development Training, Spoken English

Price and yield are inversely proportional.
Comments
Dislike Bookmark

Business Analyst in Investment banking with 9 years of solid global industry experience

They are intrlinked to earning coupon for the period
Comments
Dislike Bookmark

Computer Wizard

* The bond is called by the issuer at the first possible date is called yield to call (YTC) * A call usually occurs after a fall in market interest rates that allows issuers to refinance outstanding debt with new bonds. Bond prices move inversely with interest rates. * For a given absolute change...
read more
* The bond is called by the issuer at the first possible date is called yield to call (YTC) * A call usually occurs after a fall in market interest rates that allows issuers to refinance outstanding debt with new bonds. Bond prices move inversely with interest rates. * For a given absolute change in a bond’s yield to maturity, the magnitude of the price increase caused by a decrease in yield. Decreasing yields cause bond prices to rise, but long-term bonds increase more than short-term. Similarly, increasing yields cause long-term bonds to decrease in price more than short-term bonds. We know that Modified duration = - (1/p) * [( Dp)/(Dy )] where p is the bond price, Dp is the change in bond price and Dy is the change in the required rate of return (yield to maturity). From the above formula, we can see that Dp/ Dy is the first derivative of the bond price with respect to yield to maturity. read less
Comments
Dislike Bookmark

maths,science..

They are inversly proprtinal to each other
Comments
Dislike Bookmark

TEACHING MATHS

When price goes up, yield goes down and vice versa. Technically, you'd say the bond's price and its yield are inversely related.
Comments
Dislike Bookmark

View 7 more Answers

Related Questions

I find it very tough to understand and study Geography. I wanted to know some ways to make the subject more interesting......
Practice methods of learning the geography as facts and information rather than mugging it up. relate it with the day to day scenes which you come across. i found it interesting and helpfull. hope it...
S
Blue mountains is generally known as ..........?
There are many mountain ranges or hills across the globe that are locally known as blue mountains. In India, The Nilgiris in the Western Ghats are known as blue mountains. ("Nil"= blue "giri"=mountains)
Sandeep Kumar
What is the difference between stress and pressure
There are many differences between stress and pressure which are as follows 1. Stress is internal resistive force per unit area whereas pressure is externally applied normal force per unit area. 2.Stress...
Gaurav
One word for "A study of ancient things".
Archaeology.
Abhishek
Rewrite the sentence into passive voice - The cat chased the rat.
The rat was chased by the cat.
Igno

Now ask question in any of the 1000+ Categories, and get Answers from Tutors and Trainers on UrbanPro.com

Ask a Question

Related Lessons

Do and Dont's
-Learn By Examples, By relating it to real life things. You will retain it for long. -Dont ever wait for your teachers or tutors for starting something new topics. Make your own pace study before enyone...

Shashank Upadhyay

0 0
0
4 Things Every Tech Startup Needs to Know About The Coaching Industry
Knowledge on any subject is widely available to those who wish to learn. However, just gathering knowledge from other people doesn’t guarantee results in business. Results come from applying what...

Rajesh N V

3 0
1
smart work with patience creates victory
In a village named ramapuram aa unemployee gopi lives. He is in search of job, roaming without food from a week. He decided to sell the wooden sticks by chopping the tree, he started chopping the trunk...

Naveen Kumar Bandari

0 0
0
Function of Minerals in Human body and their sources
Function of Minerals in Human body and their sources Mineral Best source Function Iron Meat especially organ meat, legumes, green leafy vegetables, seaweed,...

Sudipto Maity

0 0
0
How to calculate 1203579 * 9999999 in 2 Sec?
203579 × 9999999 = 1203579-1 | 10000000- 1203579 =120357887964 21 Number in red is 1 less than 1203579. Number in blue is (10000000-1203579). Hence the answer. This method has to be altered...

Debraj Paul

0 0
0

Recommended Articles

The Trend of E-learning and it’s Benefits

E-learning is not just about delivering lessons online. It has a much broader scope that goes beyond manual paper or PowerPoint Presentations. To understand the reach of E-learning and how the whole process works in developing the Educational system, we will discuss a few points here. Let us find out how this new learning...

Read full article >

5 Engaging Activities For Children To Get...

Learning for every child starts from a very young age. While the formal methods include school curriculums and private lessons, the informal methods include dancing, music, drawing, and various fun-filling activities. Playing games and practising these types of activities helps the children get out of boredom and...

Read full article >

The Rising Problems in Indian Government School

With the mushrooming of international and private schools, it may seem that the education system of India is healthy. In reality, only 29% of children are sent to the private schools, while the remaining head for government or state funded education. So, to check the reality of Indian education system it is better to look...

Read full article >

6 Exam Hall Tips To Follow, For Every Good Student

Appearing for exams could be stressful for students. Even though they might have prepared well, they could suffer from anxiety, tension etc. These are not good for their health and mind. However, following a few exam preparation tips can save them from all these and help them to score good marks. Let’s find out all...

Read full article >

Find Class 8 Tuition near you
Class 8 Tuition in Delhi
Class 8 Tuition in Bangalore
Class 8 Tuition in Hyderabad
Class 8 Tuition in Kolkata
Class 8 Tuition in Mumbai
Class 8 Tuition in Chennai
Class 8 Tuition in Pune
Class 8 Tuition in Noida
Class 8 Tuition in Gurgaon
Class 8 Tuition in Lucknow
Online Tuition Class 8

Looking for Class 8 Tuition ?

Learn from the Best Tutors on UrbanPro

Are you a Tutor or Training Institute?

Join UrbanPro Today to find students near you