Interest Rate Risk

[archived_user]

Can someone explain in simple terms why the coupon rate and YTM are inversely related to interest rate risk? (One goes up, the other goes down).

 

[archived_user]

You should try to search for this one; there are a bazillion threads on this, as it gets asked multiple times every year.
While you’re doing that, think about the effect of coupon rate and YTM on Macaulay duration; as Macaulay duration goes, so goes modified duration (and, therefore, interest rate risk).