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Any regular coupon bond of any maturity will sell for its face value if the coupon...

Any regular coupon bond of any maturity will sell for its face value if the coupon rate is the same as the market rate of interest. TRUE or FALSE? Explain and provide an example to support your answer.

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Answer #1
Answer : True
Explanation : There is an inverse relation between bond price and market rate of interest.
If the market rate of interest is greater than the coupon rate, then the bond price will be lower than the face value
If the market rate of interest is Lower than the coupon rate, then the bond price will be greater than the face value
But If the market rate of interest is equal to the coupon rate, then the bond price will be equal to the face value
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