An initial issue price equal to the face value of the bonds means that the implicit interest rate equals the _____.
A)fair interest rate
B)average interest rate
C)future interest rate
D)yield to maturity
E)past interest rate

Question

Quizplus · Accepted Answer

When the initial issue price of a bond is equal to its face value, this means that the bond is issued at par. The yield to maturity, or the total return anticipated on the bond, is equal to the implicit interest rate. Therefore, the answer is D - yield to maturity.

An Initial Issue Price Equal to the Face Value of the Bonds