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CFA Level 1
Fixed Income

Bond Market Pricing and Yield Relationships

Very Hard Fixed Income Securities Bond Markets

In the context of the bond markets, consider a corporate bond that was issued at a par value of $1,000 with a coupon rate of 5% and matures in 10 years. The bond's yield to maturity (YTM) at the time of issuance was exactly equal to its coupon rate. However, due to changes in market conditions, the current YTM of the bond has increased to 6%. If the bond is traded in the secondary market, what can you infer about its market price relative to its par value?

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