What is the yield to maturity for a 5% annual coupon bond trading at par? The bond matures in 10 years.

What is the yield to maturity for a 5% annual coupon bond trading at par? The bond matures in 10 years.
A . Less than 5%
B . Equal to 5%
C . Greater than 5%
D . Cannot be determined based on the given information

View Answer

Answer: B

Explanation:

The yield to maturity for a bond trading at par will be identical to its coupon. Therefore the yield to maturity for this bond will be 5%