Why do bond yields rise when market rate interest goes up, also what does this have to do with the coupon? and Bond Street Lights

Why do bond yields rise when market rate interest goes up, also what does this have to do with the coupon?

I'm so confused how bonds work. Also what do you anticipate will happen to bond prices and yields to both treasury and corporate bonds.


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Answer by fcas80
If the market interest rate rises, the bond price falls; your fixed coupon rate bond is not as attractive as it previously was. Now that the price has fallen, the fixed return on the bond when divided into that lower price, which is the bond yield, rises.

If you are doing bond calculations, calculate the theoretical price and yield of a bond at two market interest rates to see this.

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