When the market interest rate is the same as the coupon rate for a particular quality of bond, the bond will be priced:

Question

Quizplus · Accepted Answer

When the market interest rate is the same as the coupon rate, the bond will be priced at its par value. This is because investors are indifferent between investing in the bond and in other investments with the same interest rate. Therefore, the bond should be priced at its par value, which is the initial investment amount that the bondholder receives back at maturity.

When the Market Interest Rate Is the Same as the Coupon