Interpret Bond Yield Measures
Series 65 · Flashcards
SERIES 65 · FLASHCARDS
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QUESTION
Identify the relationship among coupon rate, YTM, and price when a bond trades at a discount to par.
QUESTION
Find the current yield for a
4
%
4\%
4%
annual coupon bond priced at
102
102
102
(par
=
100
=100
=
100
).
QUESTION
What is the relationship between coupon rate and YTM when a bond trades at par value?
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ANSWER
Par bond:
YTM
=
coupon rate
\text{YTM}=\text{coupon rate}
YTM
=
coupon rate
. At par, the yield equals the coupon rate since there is no price adjustment to maturity.
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