A company releases a five-year bond with a face value of $1000 and coupons paid semiannually. 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) 5%
C) 6%
D) 7%

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