Question
(Bond valuation) Fingen's 17-year, $1000 par value bonds pay 9 percent interest annually. The market price of the bonds is $1,070 and the market's required
(Bond valuation) Fingen's 17-year, $1000 par value bonds pay 9 percent interest annually. The market price of the bonds is $1,070 and the market's required yield to maturity on a comparable-risk bond is 7 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required rate of return.
c. Should you purchase the bond?
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Basic Finance An Introduction to Financial Institutions, Investments and Management
Authors: Herbert B. Mayo
11th Edition
1285425790, 1285425795, 9781305464988 , 978-1285425795
