Question
(Bond valuation)Fingen's 11-year, $1000 par value bonds pay 12 percent interest annually. The market price of the bonds is $870 and the market's required yield
(Bond valuation)Fingen's 11-year, $1000 par value bonds pay 12 percent interest annually. The market price of the bonds is $870 and the market's required yield to maturity on a comparable-risk bond is 13 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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Investment Analysis And Portfolio Management
Authors: Frank K. Reilly, Peggy L. Hedges, Philip Chang, Keith C. Brown, Hedges Reilly Brown
1st Canadian Edition
0176500693, 978-0176500696
