When a bond's cash flows are discounted at the yield to maturity their present value will equal the purchase price.

Name: When a bond's cash flows are discounted at the yield to maturity their present value will equal the purchase price.
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This is a basic principle of bond pricing. When the cash flows (interest payments and principal repayment) of a bond are discounted at the bond's yield to maturity, the sum of the present values is equal to the bond's purchase price.

When a Bond's Cash Flows Are Discounted at the Yield