With other attributes unchanged, the lower the bond coupon rate, the greater the fluctuation between bond price and expected yield. For example, there are five kinds of bonds with a maturity of 20 years and a face value of 100 yuan. The only difference is coupon rate, that is, their coupon rate is 4%, 5%, 6%, 7% and 8% respectively. If the expected yield of these bonds is 7%, we can calculate their intrinsic values separately. If the expected rate of return changes (up to 8% and down to 5%), the new intrinsic values of these five bonds can be calculated accordingly.

1. Under the same expected rate of return, regardless of the increase or decrease of the rate of return, the intrinsic value of the five bonds with the lowest (4%) in coupon rate fluctuated the most. With the increase of coupon rate, the intrinsic value of the five bonds gradually decreased. Therefore, the lower the coupon rate of bonds, the greater the fluctuation of bond prices.

2. The coupon rate and yield of bonds are different in three aspects: the overview of the two is different: the coupon rate overview of bonds: refers to the annual interest rate of bonds, which is equivalent to a certain proportion of the face value of bonds. Overview of bond yield: refers to the ratio of the total income generated by investing in bonds to the total investment principal every year. There are two types of bonds: coupon rate type: coupon rate can be fixed (that is, bonds and Exchange Fund bonds have fixed interest rates throughout their life cycle), floating (that is, the fixed interest rate is determined according to a reference interest rate, such as Hongkong Interbank Offered Rate or London Interbank Offered Rate+Profit), or zero interest rate. Take Exchange Fund bonds as an example. The coupon rate is paid to them every six months.

3. Bond yield type: demand yield: demand yield, also known as direct yield, refers to the income generated by interest income. It is usually paid twice a year, which accounts for most of the income generated by corporate bonds. The current rate of return is the annual interest rate of bonds divided by the current market price. It does not consider the capital gains and losses of bond investment, but only measures the ratio of cash income obtained by bonds to bond prices in a certain period of time. Yield to maturity: The so-called yield to maturity refers to the income from holding bonds until the repayment period, including all interest on the maturity date. Yield to maturity, also known as the final rate of return, is the internal rate of return on investment in purchasing government bonds, that is, the present value of future cash flows. The discount rate for investing in US Treasury bonds is equal to the current market price of bonds. It is equivalent to the average annual rate of return that investors can get by buying at the current market price and holding it until maturity.