Relationship b/w bond''s market price and yield to maturity, Financial Management

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What is the relationship between a bond's market price and its promised yield to maturity?  Explain.

A bond's market price reckon on its yield to maturity (YTM).  When a bond has an YTM greater than its coupon rate, it sells at a discount from its face value.  When the YTM is equivalent to the coupon rate, the market price equals the face value.  When the YTM is smaller than the coupon rate the bond sells at a premium over face value.

 


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