If a bond is selling for its face value,which of the following statements is true?
A)The coupon rate and the yield to maturity are the same.
B)The par value is less than the face value.
C)This is only possible if this is a zero coupon bond.
D)All of the statements above are true.

Question

Quizplus · Accepted Answer

If a bond is selling for its face value, it means that the market interest rate is equal to the coupon rate. Therefore, the yield to maturity, which takes into account the total return of the bond, would also be equal to the coupon rate. So, statement A is true. Statement B is incorrect because the par value is the same as the face value. Statement C is incorrect because a zero coupon bond is sold at a discount, not at face value.

If a Bond Is Selling for Its Face Value,which of the Following