A $1000 face value coupon bond has a 10% coupon rate, a maturity of 4 years, and a price of $950.
Calculate the present value of the bond when the interest rate is 12%. Must the yield to maturity be above or below 12%, and why?
I got the PV value to be 939.25 but I dont know how to answer the second part of the question regarding yield to maturity. Also what does the interest rate mentioned in this question reflect & how does it differ from YTM?
The reasoning behind your answer would be greatly appreciated.