If a bond is selling at par value, then:
A)the yield to maturity is less than the coupon rate.
B)the yield to maturity is greater than the coupon rate.
C)the yield to maturity is equal to the coupon rate.
D)its duration must be greater than its maturity.
E)its duration must be equal to its maturity.

Question

Quizplus · Accepted Answer

When a bond is selling at par value, it means that the market interest rate is such that the yield to maturity (YTM) equals the coupon rate. Therefore, the answer is (C). Neither the duration nor the maturity affect the relationship between the YTM and coupon rate when a bond is selling at par value, so options (D) and (E) are not correct.

If a Bond Is Selling at Par Value, Then