If a bond is priced at par value, then:
A)It has a very low level of default risk
B)Its coupon rate equals its yield to maturity
C)It must be a zero-coupon bond
D)The bond is quite close to maturity

Question

Quizplus · Accepted Answer

If a bond is priced at par value, it means the bond's market price equals its face value. In such cases, the coupon rate of the bond is equal to its yield to maturity. This implies that the expected cash flows from the bond, when discounted at the yield to maturity rate, equal the current market price. So, if a bond is priced at par, it has no premium or discount, and its coupon rate is the same as the yield to maturity.

If a Bond Is Priced at Par Value, Then