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Q: Finance/Treasury bonds ( Answered 5 out of 5 stars,   1 Comment )
Subject: Finance/Treasury bonds
Category: Business and Money > Finance
Asked by: rhemaword-ga
List Price: $20.00
Posted: 05 Oct 2005 06:46 PDT
Expires: 04 Nov 2005 05:46 PST
Question ID: 576615
A 10-year Treasury bond is issued with a face value of $1,000, paying
interest of $60 a year. If market yields increase shortly after the
T-bond is issued, what happens to the bond's:
a. coupon rate?
b. price?
c. yield to maturity?
Subject: Re: Finance/Treasury bonds
Answered By: omnivorous-ga on 05 Oct 2005 08:05 PDT
Rated:5 out of 5 stars
Rhemaword ?

A.	The coupon rate is $60 per year and is unaffected by changes in
market interest rates.

B.	When market yields rise, bond prices fall to increase the yield to
the new market levels.  As Franklin Templeton notes in this excellent
summary of bonds and interest rates, ?In order to sell their existing
bonds, investors have to reduce their prices to make them equally

Franklin Templeton
?How do interest rates affect bond prices??

C.  The yield-to-maturity increases because of the bond?s price decline.
?Yield to Maturity? (undated)

Google search strategy:
Bonds ?rise in interest rates?

Best regards,

rhemaword-ga rated this answer:5 out of 5 stars
Thanks so much, your assistance and knowledge is greatly appreciated.

Subject: Re: Finance/Treasury bonds
From: myoarin-ga on 05 Oct 2005 13:22 PDT
I wonder how many times this question been posted in various scenarios on GA?

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