Ignoring default risk,if a bond's expected return is greater than its required return,then the bond's market price must be greater than the present value of the bond's cash flows.

Question

Quizplus · Accepted Answer

If a bond's expected return is greater than its required return, it indicates that the bond is undervalued, and thus, its market price would be less than the present value of its cash flows, as investors would be willing to pay more for its future cash flows than its current market price.

Ignoring Default Risk,if a Bond's Expected Return Is Greater Than