Bond valuation relationships)Stanley, Inc. issues

1010-year

$1 comma 0001,000

bonds that pay

$9090

annually. The market price for the bonds is

$1 comma 0671,067.

The market's required yield to maturity on a comparable-risk bond is

88

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

1212

percent or (ii) decreases to

66

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

88

percent?

$nothing

(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

1212

percent?

$nothing

(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

66

percent?

$nothing

(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

increases to 12%

decreases to 6%

, you

should

should not

purchase the Stanley bonds at the current market price of

$1 comma 0671,067.

(Bond valuation relationships) Stanley, Inc. issues 10-year $1,000 bonds that pay $90 annually. The market price for the bonds is $1,067. The market's required yield to maturity on a comparable-risk bond is 8 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 (1) increases to 12 percent or (ii) decreases to 6 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 8 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 12 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 6 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 V purchase the Stanley bonds at the current market price of $1,067