The higher the coupon rate, the smaller the bond price change in reaction to a change in market interest rates.

Alright, let's break this down.

First, let's remember what a coupon rate is. It's the amount of money you get every year from a bond. It's like getting a small gift every year for having the bond.

Now, imagine you have a bond with a high coupon rate. This means you're getting a lot of money every year from this bond.

Next, let's think about what happens when market interest rates change. This is like the general level of interest rates in the economy. When these rates go up or down, it can affect the price of bonds.

But here's the thing: if you have a bond with a high coupon rate, the price of your bond doesn't change as much when market interest rates change.

Why? Well, think about it like this: if you're getting a lot of money every year from your bond (because it has a high coupon rate), you're less worried about changes in market interest rates. You're already getting a good deal from your bond, so you're less likely to sell it if market interest rates change. This means the price of your bond stays more stable, or changes less.

So, to sum up: the higher the coupon rate, the less the bond's price changes when market interest rates change. It's like having a sturdy boat in a stormy sea - even if the waves (market interest rates) are big, your boat (bond price) doesn't rock as much because it's well-built (has a high coupon rate).