What is the relation between the coupon rate on a bond and its duration quizlet?

Because the payment of coupons shortens the time for receipt of cash flows, the duration will be less than the term to maturity. For a given coupon rate, a bond’s duration increases with maturity. For a given term to maturity, the higher (lower) the coupon rate, generally, the smaller (greater) is the bond’s duration.Click to see full answer. Also to know is, what is the relationship between the price of a bond and its YTM?A bond’s yield to maturity (YTM) is the internal rate of return required for the present value of all the future cash flows of the bond (face value and coupon payments) to equal the current bond price. YTM assumes that all coupon payments are reinvested at a yield equal to the YTM and that the bond is held to maturity.Beside above, what is the yield to maturity quizlet? Terms in this set (12) What is the relationship between a bond’s price and its yield to maturity? The yield to maturity of a bond is the discount rate that sets the present value of the promised bond payments equal to the current market price of the bond. Similarly one may ask, what is the relationship between a bond’s price and its yield? Coupon rate—The higher a bond’s coupon rate, or interest payment, the higher its yield. That’s because each year the bond will pay a higher percentage of its face value as interest. Price—The higher a bond’s price, the lower its yield. That’s because an investor buying the bond has to pay more for the same return.Why is the bond yield to maturity less than its coupon rate?If the YTM is less than the bond’s coupon rate, then the market value of the bond is greater than par value ( premium bond). If a bond’s coupon rate is less than its YTM, then the bond is selling at a discount. If a bond’s coupon rate is equal to its YTM, then the bond is selling at par.