This is no coincidence—in general, when coupon and yield are equal, the price of the bond is par. As price rises from here, say to $102, the yield falls to 4.5%, while a drop in price, for example, to $97, results in the yield rising to 5.7%. The price/yield equation also makes it clear that as the yield is in the denominator, an increase in the yield therefore would lower the price.
- Chapter 2: Bonds
- from Interest Rate Markets: A Practical Approach to Fixed Income
- Publisher: John Wiley & Sons
- Released: April 2011
yield price relation.