Here's a small excerpt from Bond Valuation section on Investopedia:
Determining Whether a Bond Is Under or Over Valued What you need to be able to do is value a bond like we have done before using the more traditional method of applying one discount rate to the security. The twist here, however, is that instead of using one rate, you will use whatever rate the spot curve has that coordinates with the proper maturity. You will then add the values up as you did previously to get the value of the bond.
You will then be given a market price to compare to the value that you derived from your work. If the market price is above your figure, then the bond is undervalued and you should buy the issue. If the market price is below your price, then the bond is overvalued and you should sell the issue.
If the market price is above the bond value that you calculate then isn't the bond over-valued?? (literally speaking at least). Why would you want to buy the bond in this case when you know it is priced above its value?? I'm having some trouble understanding this concept
(I'm looking for an answer assuming the bonds are corporate bonds (if that makes any difference)