Which of the following statements is CORRECT?
A) If a coupon bond is selling at par,its current yield equals its yield to maturity.
B) If rates fall after its issue,a zero coupon bond could trade at a price above its maturity (or par)value.
C) If rates fall rapidly,a zero coupon bond's expected appreciation could become negative.
D) If a firm moves from a position of strength toward financial distress,its bonds' yield to maturity would probably decline.
E) If a bond is selling at a premium,this implies that its yield to maturity exceeds its coupon rate.

Question

Quizplus · Accepted Answer

When a coupon bond is selling at par, its coupon rate is equal to the current yield and yield to maturity. This is because the bond is priced at its face value, and the coupon payments and face value payments represent the same yield.

Which of the Following Statements Is CORRECT