Asked by Deangelo Johnson on May 06, 2024
Verified
If the coupon rate and yield to maturity are both 5%, then the bond must be:
A) A zero-coupon bond.
B) Selling at a discount.
C) Selling at par.
D) Maturing within one year.
E) Selling above face value.
Coupon Rate
The interest rate stated on a bond when it's issued which represents the annual interest payment the bondholder will receive.
Selling at Par
Selling at par refers to the condition where a security is sold at its face value, not at a discount or premium.
- Gain insight into the determinants of bond prices and how they are related to prevailing market interest rates.
Verified Answer
AC
ARNAB CHOWDHURYMay 07, 2024
Final Answer :
C
Explanation :
When the coupon rate equals the yield to maturity, the bond sells at its face value, which is known as selling at par.
Learning Objectives
- Gain insight into the determinants of bond prices and how they are related to prevailing market interest rates.