ABC Ltd issued a bond today with a face value of $1,000 and a coupon of 10% that is paid annually. The bond matures in two years and the yield to maturity of the bond is currently 8%.

Without calculation, would you expect the bond price to be greater than, equal to, or less than the face value of the bond? Explain why.

Calculate the market price of the bond.

Note: Answers should be expressed in dollars rounded to the nearest $0.01