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Economics

Bond Yield

Quick fact

When a bond's price rises above its face value, its yield falls below the coupon rate—a seemingly paradoxical relationship that is central to bond investing.

Why this is interesting

You know that when you buy a bond, you lend money, but did you know that the yield—the return you get—moves in the opposite direction of the bond's price? Why would your return shrink when the price goes up?