Read the two statements and choose the correct option.

I. A bond that sells at par has a yield equal to its coupon rate.

II. A bond that sells at a discount has a yield below its coupon rate.

Explanation

1. 01

   I: paying exactly the face value, the buyer earns exactly the coupon rate. True.

2. 02

   II: paying less than face value, the buyer earns the coupons plus the gain to face value, so the yield is above the coupon rate. False.