'BOND VALUATION'

(1) A bond is being traded in the market at $1150 per bond with 13% coupon rate and having 15 years of maturity, here face value is $1000. Should the bond be bought or not? Explain your answer with the help of calculations.

(2) A bond is being traded in the market for $1075 with 11% coupon rate and 17 years of maturity life and the required rate of return on this bond in the market is 9%. Here face value is $1000.

Requirement

a) Should the bond be bought? Explain your answer with the help of calculations.

b) If the bond is bought at its current market price what would be its yield to maturity for the bondholder/investor.

Guidelines:

- Please answer with the use of formula, manually. (Do not solve directly by finance app or excel formulas)

- Please write the answer with proper detail and reasoning when giving explanation.

Example of Formula:

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