A coupon bond that pays interest semi-annually is selling at a par value of $1,000, matures in seven years, and has a coupon rate of 8.6%. The yield to maturity on this bond is

Question

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The yield to maturity (YTM) of a bond is equal to its coupon rate when the bond is selling at par value. Since the bond is selling at its par value of $1,000 and has a coupon rate of 8.6%, the YTM is also 8.6%.

A Coupon Bond That Pays Interest Semi-Annually Is Selling at a Par