Respuesta :
Answer:
The correct answer is letter "D": negatively; rises; falls.
Explanation:
A bond coupon rate is the amount of interest incoming earns each year based on its face value. A bond yield to maturity is the total estimated return if the bond is held until maturity. When the bond is first issued, the bond coupon and the yield to maturity are the same. Later on, due to interest rates, the coupon rate could increase or decrease causing the face value of the bond to move in the same direction. However, the yield to maturity will move in equal but different direction.
The rise of Yield to maturity (YTM) lowers the price of a coupon bond and the decline of YTM increases the price of the bond. The relationship between the bond value and its Yield to maturity (YTM) is convex.
What is Yield to Maturity (YTM)?
Yield to maturity (YTM) is the total amount of return expected from a bond when the bond is held until maturity. The yield at maturity is considered to be a long-term bond yield but is expressed as an annual value.
Yield to maturity is a market discount rate given the price of a bond. The price of the bond goes against its YTM.
The bond coupon rate is the amount of interest earned each year based on its face value. The benefit of the bond to maturity is a limited amount of return if the bond is withheld until maturity.
When the bond is first issued, the bond coupon and the yield at maturity are the same. Later, due to interest rates, the coupon rate may increase or decrease, causing the bond face value to move in the same direction.
However, the Yield to maturity will go in a similar but different way.
Thus, the correct option is D. Negatively; rises; falls
To learn more about Yield to maturity, refer to the link:
https://brainly.com/question/25596583
