Which of the following is correct when a bond investor's rate of return for a particular period equals the bond's coupon rate?
A) The bond increased in price during the period.
B) The bond decreased in price during the period.
C) The coupon payment increased during the period.
D) The bond price remained unchanged during the period.

Question

Quizplus · Accepted Answer

When an investor's rate of return for a particular period equals the bond's coupon rate, it means that the bond price remained unchanged during that period. This is because the coupon rate is the fixed interest rate specified in the bond contract, and the coupon payments are made based on this rate. Therefore, if the investor's rate of return equals the coupon rate, it means that the investor earned exactly the expected cash flows from the bond and did not experience any gain or loss in market value.

Which of the Following Is Correct When a Bond Investor's