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Pull to par

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"Pull to Par" is effect that forces the price of the bond to converge to par value as time passes because at maturity the price of the credit instrument in good standing should equal to its face value.

Another name for this effect is "reduction of maturity".

It results from the difference between market interest rate and the nominal yield on the bond.

"Pull to Par" effect is one of two factors that influence the market value of the bond and its volatility (the second one is the level of market interest rates).

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