Your grandmother has some of her money invested in corporate bonds. She has just come from a meeting with her investment advisor and asks you the following: "What is all this confusion about interest rates? There is a coupon rate, a market rate, and the current yield. And, as I understand it, some of the rates change during the life of a bond and some don't. Why is it so confusing?"
Instructions
Explain what is meant by the coupon rate and the market rate. Also, indicate which rates change and which remain constant during a bond's life.

Question

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The Answer of Your grandmother has some of her money invested in corporate bonds. She has just come from a meeting with her investment advisor and asks you the following: "What is all this confusion about interest rates? There is a coupon rate, a market rate, and the current yield. And, as I understand it, some of the rates change during the life of a bond and some don't. Why is it so confusing?"
Instructions
Explain what is meant by the coupon rate and the market rate. Also, indicate which rates change and which remain constant during a bond's life.

Your Grandmother Has Some of Her Money Invested in Corporate