This is an independent topic guide, not the official syllabus. Compare it with the current paper outline and rules published by the examination authority.
01 / UNDERSTANDING
Learning objectives
Cover face value, coupon, price, current yield and yield to maturity through one cash-flow timeline. The objective is to identify the denominator and cash flows behind each measure. Explain why a market price can change while the contractual coupon remains constant, then distinguish a valuation yield from a realised holding-period result.
02 / UNDERSTANDING
The concept in context
A conventional fixed-rate bond specifies coupon payments and a principal repayment. The coupon rate relates the coupon to face value, while current yield relates the annual coupon to the purchase price. Neither concept should be confused with a price quotation or the more comprehensive yield-to-maturity calculation.
03 / UNDERSTANDING
A worked learning case
A fictional bond pays an annual coupon of 6 units on a face value of 100. One learner buys it for 100 and another for 90. Both receive the same promised coupon, but their current yields differ. The class then includes the eventual principal repayment to explain why current yield alone does not measure yield to maturity.
ORIGINAL EDUCATIONAL PRACTICE
Try it before you check.
Does buying a fixed-coupon bond at a lower price change its promised coupon amount?
Show the answer and reasoning
No; it changes the relationship between the purchase price and the cash flows.
The contractual coupon follows the bond's terms, not the price paid by a new holder in the market. A lower purchase price raises the coupon relative to that price, all else equal. A complete holding-period return still needs the remaining payments, any sale or redemption value and relevant reinvestment assumptions.
Two traps to watch for.
- Calling the coupon rate the investor's guaranteed realised return.
- Using current yield as if it included every remaining cash flow.
YOUR TOPIC-SPECIFIC LEARNING MAP
Your revision map
Calculate coupon income from face value and stated terms.
Compare current yields at two fictional purchase prices.
List the assumptions needed for a holding-period return.
Explain the idea, apply it to a new situation, then check what changed in your reasoning.
BANKERS TUTORIAL · SOURCE NOTES
Keep the source alongside your notes.
Official links provide subject context and authoritative reference material. This guide’s explanation, scenario and question are original Bankers Tutorial learning content.
- iibf.org.in https://iibf.org.in/caiib-certified-associate-IIBF
- iibf.org.in https://iibf.org.in/documents/RulesSyllabus/2026/FlagshipCourses/60%20-%20CAIIB_24.07.25_Change_Final%20Website_23.02.2026.PDF
- m.rbi.org.in https://m.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=711
For CAIIB preparation, check the current official notice before relying on changing dates, rules or examination requirements.
