When the current yield and the coupon rate are equal, the bond is:

Question

Quizplus · Accepted Answer

When the current yield and the coupon rate are equal, the bond is purchased at a price that equals the face value. This is because the coupon rate determines the interest rate that the bond pays, and the current yield is the bond's annual interest payment expressed as a percentage of its current market price. If these two rates are equal, then the bond's price will be at par, or face value.

When the Current Yield and the Coupon Rate Are Equal