Given the 1 year bond with a price 98 and C as 8% on face value 100. I want to find the implied single compounding interest rate. I can solve for r via the bond price formula or I can just set up the equation 98(1+r)=106 and solve for r and it will be the same. However I do not 100% understand why this is the case. Is it because we are assuming no arbitrage and the redemption yield is the current prevailing market rate and thus, for example, a bank account must have this interest rate? Grateful for any answers


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