When a bond sells at a discount, what is the relation between YTM, current yield and coupon yield?
Answer
YTM > current yield > coupon yield
Tags
#bonds #finance
Question
When a bond sells at a discount, what is the relation between YTM, current yield and coupon yield?
Answer
?
Tags
#bonds #finance
Question
When a bond sells at a discount, what is the relation between YTM, current yield and coupon yield?
Answer
YTM > current yield > coupon yield
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Parent (intermediate) annotation
Open it The concept of current yield is closely related to other bond concepts, including yield to maturity, and coupon yield. The relationship between yield to maturity and the coupon rate is as follows:
When a bond sells at a discount, YTM > current yield > coupon yield.When a bond sells at a premium, coupon yield > current yield > YTM.When a bond sells at par, YTM = current yield = coupon yield
Original toplevel document
Bond valuation - Wikipedia, the free encyclopedia s simply the coupon payment as a percentage of the face value .
Coupon yield is also called nominal yield.
Current yield[edit]
The current yield is simply the coupon payment as a percentage of the (current) bond price .
Relationship[edit]
<span>The concept of current yield is closely related to other bond concepts, including yield to maturity, and coupon yield. The relationship between yield to maturity and the coupon rate is as follows:
When a bond sells at a discount, YTM > current yield > coupon yield.When a bond sells at a premium, coupon yield > current yield > YTM.When a bond sells at par, YTM = current yield = coupon yield
Price sensitivity[edit]
Main articles: Bond duration and Bond convexity
The sensitivity of a bond's market price to interest rate (i.e. yield) movements is measured by its duration, and,
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