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      Question

      Which of the following relationships apply to a par

      value bond? A)┬а┬а coupon rate < yield-to-maturity B)┬а┬а current yield = yield-to-maturity C)┬а┬а market price = call price D)┬а┬а market price = face value
      A A and B only Correct Answer Incorrect Answer
      B A and C only Correct Answer Incorrect Answer
      C B and D only Correct Answer Incorrect Answer
      D A, B, and C only Correct Answer Incorrect Answer
      E B, C and D only Correct Answer Incorrect Answer

      Solution

      The par value of a bond also called the face amount or face value is the value written on the front of the bond. This is the amount of money that bond issuers promise to be repaid bondholders at a future date. Characteristics of par value bond: ┬а┬а┬а┬а┬а I. current yield = yield-to-maturity ┬а┬а┬а II.┬а market price = face value

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