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Can you also do Parts b and c for the following problem. (Related to Checkpoint 9.3) (Bond valuation) Doisneau 15-year bonds have an annual coupon
Can you also do Parts b and c for the following problem.
(Related to Checkpoint 9.3) (Bond valuation) Doisneau 15-year bonds have an annual coupon interest of 8 percent, make interest payments on a semiannual basis, and have a $1,000 par value. If the bonds are trading with a market's required yield to maturity of 15 percent, are these premium or discount bonds? Explain your answer. What is the price of the bonds? a. If the bonds are trading with a yield to maturity of 15%, then (Select the best choice below.) O A. the bonds should be selling at par because the bond's coupon rate is equal to the yield to maturity of similar bonds. O B. there is not enough information to judge the value of the bonds. OC. the bonds should be selling at a premium because the bond's coupon rate is greater than the yield to maturity of similar bonds. D. the bonds should be selling at discount because the bond's coupon rate is less than the yield to maturity of similar bonds. b. The price of the bonds is $. (Round to the nearest cent.) (Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 11-year, $1,000 par value bonds pay 14 percent interest annually. The market price of the bonds is $1,050 and the market's required yield to maturity on a comparable-risk bond is 12 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? a. What is your yield to maturity on the Fingen bonds given the market price of the bonds? % (Round to two decimal places.)Step by Step Solution
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