The document describes a bond that matures in 4 years, costs $100, and pays annual interest of 5%. It notes that when market interest rates are also 5%, matching the bond's coupon rate, the bond price will always be at par, or $100. The yield to maturity formula is provided to calculate that this bond's yield is also 5% given the current interest rate environment.

1. 26. What causes the inverse relationship between interest rates and bond prices?

2. Imagine:Interest rates in the market are sitting at 5%. You decide it’s time to buy a bond!Here are the vitals for MyFirstBond Corp’s new issue:Matures in 4 yearsCosts $100Pays interest of 5% per yearAssessment Strategies

3. Raise your Hand

4. ResponsibilitiesImagine:Interest rates in the market are sitting at 5%. You decide it’s time to buy a bond.Here are the vitals for MyFirstBond Corp’s new issue:Matures in 4 yearsCosts $100Pays interest of 5% per yearAssessment Strategies

5. Raise your Hand

6. ResponsibilitiesImagine:Interest rates in the market are sitting at 5%. You decide it’s time to buy a bond.Here are the vitals for MyFirstBond Corp’s new issue:Matures in 4 yearsCosts $100Pays interest of 5% per yearAssessment Strategies

7. Raise your Hand

8. ResponsibilitiesImagine:Interest rates in the market are sitting at 5%. You decide it’s time to buy a bond.Here are the vitals for MyFirstBond Corp’s new issue:Matures in 4 yearsCosts $100Pays interest of 5% per yearAssessment Strategies

9. Raise your Hand