Calculating Bond Yields

The video tutorial explains how to calculate bond yields, emphasizing the importance of understanding bond yield as the interest rate earned by bondholders. It covers the bond yield formula, which involves dividing the annual coupon payment by the current market price and multiplying by 100. The tutorial provides examples, including calculating yields at the issue date and after market price changes. It also discusses the inverse relationship between bond price and yield, highlighting how price changes affect yield. The video concludes with a demonstration of manipulating the bond yield formula to find the current market price.

What is the strict definition of a bond yield?

How do you calculate the bond yield using the annual coupon payment and market price?

What caution should be taken when considering coupon payments for bonds?

What is the yield on a bond if the annual coupon payment is 20 pounds and the market price is 500 pounds?

What happens to the bond yield if the market price of a bond increases?

How do you manipulate the bond yield formula to find the current market price?

Explain the relationship between bond prices and bond yields.