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

What are the fees for home tuitions of all subjects for Class VI?
400 rupees per subject
Reema
How intestinal juice helps in digestion?
The process of digestion starts from mouth via mechanical process involved in tearing down of food into minute pieces with the help of teeth and tongue. The salivary glands located in the mouth produce...
Jagadeesh
0 0
8
Amoebiasis causative organism(Entamoeba histolytica). is a a)Virus b)bacteria c)parasite d)fungal spore
c) parasite
Kranthi Kumar
Identify the word with correct spelling: a. Schedule b. Schdulle c. Schduile d. Scduhle
Schedule.
Nishit
How can I get students for online tuitions?
Hi lakshmi...can you please suggest some other online tutor sites apart from urbanpro.com as mentioned in your comment above
Deepika

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

Ask a Question

Related Lessons

OAA
I suggest a writing tip called OAA which means Observe Analyse and Apply. one will find it easy to answer any question if you follow this trip

Roja Reddy B.

0 0
0
Profit and loss important formulas
IMPORTANT FACTS Cost Price: The price, at which an article is purchased, is called its cost price, abbreviated as C.P. Selling Price: The price, at which an article is sold, is called itsselling prices,...

Padmini R.

2 0
0
Innovation: A State-of-the-Science
Innovation research has flourished over the last 30 years. Innovative approaches which might formerly have been seen as inappropriate and disrespectful, have become increasingly sought by organizations...

Chetna S.

6 1
0
Easiest way to Find the Remainder on dividing by 7
Split the digits of the number in a group of 3 starting from unit’s place. Add the alternate group and then find their difference. Divide the difference by 7 and get the remainder. Consider the...

Debraj Paul

0 0
0
Cuemath Quiz
Can your child solve this puzzle? What is the 4th number in the following series - 2B 9D 30F 93H ?

Ipsita C.

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