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Determine the relationship between bond price and yield to maturity by constructing a graph of the...

Determine the relationship between bond price and yield to maturity by constructing a graph of the relationship

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Answer #1

Relationship between bond price and yield to maturity is inverse.

That is when yield to maturity is increased, bond price will be decrease.

When yield to maturity is decreased, bond price will be increased.

Assume the following Yield to maturity and bond prices:

Graph:

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