An analyst gathers the following information about spot rates:

• 1-year spot rate: 1.50%

• 2-year spot rate: 2.00%

• 3-year spot rate: 4.25%

A 3-year, 5% annual coupon bond with similar risk as the benchmark is trading at a yield-to-maturity of 4.25%. Compared to the arbitrage-free price, the bond is currently: