I saw in the news, that when a government is in trouble, or the investors are not sure about it's creditworthiness, the investors will require higher yield. My question is, we're talking about yield to maturity, not the coupon yield, right? So it sounds like the investors determine the yield. But how? The nominal coupon yield is fixed, YTM can change over time. Do investors affect the yield by buying the bonds (in this case) at discount, so that when we calculate the YTM using the bond formula, do we get higher YTM than coupon yield? So the investors affect the YTM by determining the price for which they are willing to buy the bond? But is the government willing to sell the bond at this price? Or is the market (supply/demand) determining the price? Thank you
original posted by ericson1998 to r/personalfinance on Mon, 15 Apr 2024 13:02:49 GMT.