Let's say you have bond priced at 100 yielding 1%.

Let's say you believe that this bond should be priced to yield 0.5% based on similar assets/whatever.

What would be the price of the bond based on your expected yield assuming perpetual bond for simplicity?

Yes, 200.

First of all: thanks for taking the time to explain this.

Intuitively, this made no sense to me. Why should an instrument with half the "payout" be worth twice as much? But I guess I'm confusing the terms yield, coupon rate, and perhaps discount rate.

I guess this would be similar to, or is in fact the same, as lowering the discount-rate in a present-value calculation? with a small enough discount-rate, the present value would be arbitrary large. I would probably be foolish to use that number to do any investing, though...

But what is the definition of "a bond yielding 1%" here? Is the calculation: a $100 bond with a coupon rate of 1%, priced at $200, is priced to be yielding 0.5%? That kind of sounds like saying "I value this stock at twice <whatever price>, because I believe the p/e multiple should be twice as high". Which I guess

*is* the same, since half the current discount-price means twice the price current price.

Still... stocks can grow into their valuation (the e can increase), while the coupon rate cannot. Even if I get the math here (and please correct me on the above ramblings if not), not sure I get the sanity of it.