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Question
What is the relationship between bond price and Present Value in equilibrium?
Options
Bond price is always less than its Present Value (PV)
Bond price equals its Present Value (PV)
Bond price is always greater than its Present Value (PV)
Bond price equals the Coupon Rate
MCQ
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Solution
In equilibrium, the bond price equals its Present Value (PV). Demand and supply pressures move the price toward this value.
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