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 the above could be correct

Question

Quizplus · Accepted Answer

A bond selling below its face value has a higher yield than the coupon rate. Since the current yield of the AT&T 5½05 bond is 6.2%, which is higher than its coupon rate, the bond must be selling below its face value. Therefore, the correct choice is C.

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