I have always guessed this question right or wrong, can anyone explain to me a simpler way of knowing the right answer to these type of questions please?
I truly want to understand this part.
I have always guessed this question right or wrong, can anyone explain to me a simpler way of knowing the right answer to these type of questions please?
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1 - Interest rates are always inverse to the market price. If a bond is trading at a discount, the rate will be high.
2 - The nominal yield will always be its base.
Therefore:
If it’s at a discount: Progressive rates (from the lowest to the highest).
Ex: NY(base) → CY → YTM → YTC.
If it’s premium: Regressive rates (from highest to lowest).
Ex: YTC → YTM → CY → NY (base).
I hope I’ve helped…
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The bond yield see saw is one of the best resources to remember the order of yields!
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Awesome thank you so much. I really appreciate this
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Thank you Justin, I overlooked this earlier in my studying material for some reason but will learn it now. I really appreciate this.
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i hope everyone has a great day and good luck on anyones exams. I will pass this SIE in April, Signed up for the 8th. Gotta get after it.
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