Question

If a bond is currently trading at its face​ (par) value, then it must be the case​ that: A. the​ bond's yield to maturity is equal to its coupon rate. B. the​ bond's yield to maturity is greater than its coupon rate.

Answer 1

Answer:

A) the​ bond's yield to maturity is equal to its coupon rate

Explanation:

If the bonds yield to maturity is equal to its coupon rate it means that the interest paid by the buyers on the face value of the bond is equal to the internal rate of return for the present value of future cash flow. Only in this scenario, a bond is traded at its face or par value.