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What is the relationship between bond prices and bond yields? For a standard coupon bond with...

What is the relationship between bond prices and bond yields? For a standard coupon bond with a face value of $1,000, if the YTM is equal to the coupon rate, what would the bond sell for? If the YTM is less than the coupon rate what would the bond sell for? If the YTM is greater than the coupon rate what would the bond sell for?

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Answer #1
Q1
Answer : Relationship between bond prices and bond yields is inverse.
Q2
Answer : If the YTM is equal to coupon rate, then the bond will sell at the face value i.e. for $1000 here.
Q3
Answer : If the YTM less than coupon rate, then the bond will sell at a price which is greater than the face value i.e. greater than $1000 here.
Q4
Answer : If the YTM greater than coupon rate, then the bond will sell at a price which is lower than the face value i.e. lower than $1000 here.
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