If a bond's purchase price equals the face value the:

Question

Quizplus · Accepted Answer

When the purchase price of a bond equals its face value, it means that the bond is being sold at par value. In this case, the coupon rate (which is the interest rate paid by the bond) will be equal to the yield to maturity (which is the total return that will be earned by the bond if held until maturity) and also equal to the current yield (which is the annual income received from the bond as a percentage of its current market price). Therefore, the correct choice is C.

If a Bond's Purchase Price Equals the Face Value The