Let's say it's the very next second that interest rates were to go up. So how much could you sell this bond for? Dheer To start off, I'll just start with a fairly simple bond, one that does pay a coupon, and we'll just talk a little bit about what you'd be willing to pay for that bond if interest rates moved up or down.
Relationship between bond prices and interest rates. Obviously, interest rates don't move this quickly, but let's say the moment after you buy that bond, or maybe to be a little bit more realistic, let's say the very next day, interest rates go up. Let's say P is the price that someone is willing to pay for a bond.
The reverse is also true. Particulars — Coupon Rate vs Interest Rate. So how much could you sell this bond for?