Which of the following are true for a coupon bond?
A) When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.
B) The price of a coupon bond and the yield to maturity are negatively related.
C) The yield to maturity is greater than the coupon rate when the bond price is above the par value.
D) All of the above are true.
E) Only A and B of the above are true.

Question

Quizplus · Accepted Answer

Option A is true as when a coupon bond is priced at its face value, the coupon rate equals the yield to maturity. Option B is true as the price of a bond and its yield are inversely related. Option C is false because when the bond price is above the par value, the yield to maturity is lower than the coupon rate.

Which of the Following Are True for a Coupon Bond