A company releases a five-year bond with a face value of $1000 and coupons paid semi-annually.If market interest rates imply a YTM of 6%,what should be the coupon rate offered if the bond is to trade at par?
A)3%
B)4%
C)6%
D)8%
E)9%

Question

Quizplus · Accepted Answer

For a bond to trade at par, the coupon rate must equal the yield to maturity (YTM). Therefore, with a YTM of 6%, the coupon rate should also be 6%.

A Company Releases a Five-Year Bond with a Face Value