How does YTM yield to maturity affect the price paid for a bond?
Not sure how to answer this one, as the question is a little ambiguous as asked. The price paid is a key factor in determining what your YTM will be, if that helps. Bottom line, the less you pay for the bond, the higher the YTM on that bond will be. Another way of looking at this that’s maybe closer to the way your question is phrased would be this: the YTM is the yield the market is currently demanding for a bond of this type, and that determines the price people will be willing to pay. The more they pay, the lower the YTM will be. Simpler still, if you’re being asked this for an assignment, the instructor is probably looking for you to say that price and YTM have an inverse relationship.
