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(Bond valuation relationships) Stanley, Inc. issues 15 -year $1,000 bonds that pay $85 annually. The market price for the bonds is $1,137. The market's required
(Bond valuation relationships) Stanley, Inc. issues 15 -year $1,000 bonds that pay $85 annually. The market price for the bonds is $1,137. The market's required yield to maturity on a comparable-risk bond is 7 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 5 percent? c. Under which of the circumstances in part b should you purchase the bond? a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 7 percent? $ (Round to the nearest cent.) b. (i) What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to 11 percent? $ (Round to the nearest cent.) b. (ii) What is the value of the bond if the market's required yield to maturity on a comparable-risk bond decreases to 5 percent? $ (Round to the nearest cent.) c. Under which of the circumstances in part (b) should you purchase the bond? (Select from the drop-down menus.) If the yield to maturity on a comparable-risk bond you purchase the Stanley bonds at the current market price of $1,137
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