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Suppose that the price of a bond is equal to $900. You know that using a YTM equal to 8% to discount the bond cash
Suppose that the price of a bond is equal to $900. You know that using a YTM equal to 8% to discount the bond cash flows, you obtain a present value equal to $850. Hence, we can assume that the YTM will definitely be:
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Higher than 8%
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Lower than 8%
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Equal to 8%
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Cannot determine how large the YTM can be without further information
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