The relationship between bond yield and bond price is inverse: when bond prices rise, yields fall, and when bond prices fall, yields rise. This relationship is governed by the formula:

Yield = Annual Coupon Payment/Current Bond Price

Here's how it works:

1. Bond Price Increases: If the price of a bond goes up, the denominator in the yield formula increases, causing the overall yield to decrease.

      2.   Bond Price Decreases: Conversely, if the bond price decreases, the denominator in the yield formula decreases, leading to an increase in yield.

For example , if a bond with a face value of ₹1,000 and an annual coupon payment of ₹50 is priced at ₹1,000, the yield is:

Yield = 50/1000 = 5%

If the bond price rises to ₹1,100, the yield becomes:

Yield = 50 / 1100 ≈ 4.55%

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