ABC company issues bonds face value of Rs 200 at the interest rate of 10%.due to changes in open market interest rate the bond value in spot Market reduced to 178Rs. if you buy the bond at the current price what is the yield from bond?
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Explanation:
The coupon rate on a bond vis-a-vis prevailing market interest rates has a large impact on how bonds are priced.
If a coupon is higher than the prevailing interest rate, the bond's price rises; if the coupon is lower, the bond's price falls.
The majority of bonds boast fixed coupon rates that remain stable, regardless of the national interest rate or changes in the economic climate.
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