Final answer:
The statement is true; a bond's market value is indeed the sum of the present value of its coupon payments and its face value, discounted at the bond's yield to maturity.
Step-by-step explanation:
The statement that a bond's current market value is equal to the present value of the coupon payments plus the present value of the face amount is true. This relationship is fundamental in finance and is used to price bonds. The present value of the coupon payments represents the income stream the bondholder expects to receive until the bond matures, while the present value of the face amount represents the lump-sum payment the bondholder expects at maturity.
When calculating the present value of these amounts, we use a discount rate that reflects the bond's yield to maturity (YTM), which is the interest rate that equates the present value of the expected future cash flows from the bond (both the periodic coupon payments and the face value at maturity) with its current market price.