Principles of Banking and Finance - Essay Example

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The required rate of return of a bond is the percentage return that the investor needs to receive from an investment to be able to purchase a security. The required rate of return adjusts the price that an investor may be willing to pay for the given security. If the required…

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Subject: Miscellaneous
Type: Essay
Level: Masters
Pages: 3 (750 words)
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Author: vkiehn

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o its par value in that the higher the coupon rate, the higher the interest rate the investor receives, hence a higher par value, while the higher the yield to maturity, the lower the par value the investor will receive (Ritter et al., 2009, p. 58). The yield to maturity has an inverse relationship to the bond prices. The yield to maturity becomes greater than the coupon rate when the bond price is less than the par

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