easy · Principles of Finance valuation
A 2-year bond with a $1,000 face value pays a 5% annual coupon.
If the current market yield to maturity (YTM) is 6%, how does the bond's price compare to its par value?
- The bond will trade at par
- The bond will trade at a discount
- The bond will trade at a premium
- The price will fluctuate but settle at par because of the short maturity
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