(Applying bond valuation relationships) Stanley, Inc., issues a 15-year $1,000 bond that pays $85 annually. The market...
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(Applying bond valuation relationships) Stanley, Inc., issues a 15-year $1,000 bond that pays $85 annually. The market price for the bond is $960. The market’s required yield to maturity on a comparable-risk bond is 9 percent.
a. What is the value of the bond to you?
b. What happens to the value if the market’s required yield to maturity on a comparable-
risk bond (i) increases to 11 percent or (ii) decreases to 7 percent?
c. Under which of the circumstances in part b should you purchase the bond?
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Related Book For
Financial Management Principles And Applications
ISBN: 9781292222189
13th Global Edition
Authors: Sheridan Titman, Arthur Keown, John Martin
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