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What Condition Must Exist If a Bond's Coupon Rate Is

Question 15

Multiple Choice

What condition must exist if a bond's coupon rate is to equal both the bond's current yield and its yield to maturity? Assume the market rate of interest for this bond is positive.


A) The clean price of the bond must equal the bond's dirty price.
B) The bond must be a zero coupon bond and mature in exactly one year.
C) The market price must exceed the par value by the value of one year's interest.
D) The bond must be priced at par.
E) There is no condition under which this can occur.

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