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    Question

    If the coupon rate and required rate of return are

    equal, the value of the bond is equal to ________________
    A Market Value Correct Answer Incorrect Answer
    B Redemption Value Correct Answer Incorrect Answer
    C Face Value + Premium Correct Answer Incorrect Answer
    D Face value - Discount Correct Answer Incorrect Answer
    E Cannot be said for sure Correct Answer Incorrect Answer

    Solution

    The required rate of return is represented by the yield to maturity (YTM). If the coupon rate and required rate of return is equal, i.e. coupon = YTM, the bond value is at par to its face value which is usually the redemption value of the bond.  

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