An AT&T 5½05 bond with a current yield of 6.2% must be selling its face value.
A)above
B)at
C)below
D)any of these could be correct

Question

Quizplus · Accepted Answer

If the current yield is higher than the coupon rate, then the bond must be selling at a discount (below its face value) to generate the higher yield. A current yield of 6.2% is higher than the coupon rate of a 5½05 bond, implying that the bond is selling below its face value. Therefore, the best choice is C.

An AT&T 5½05 Bond with a Current Yield of 6