Question
Fingen's 16-year, $1,000 par value bonds pay 15 percent interest annually. The market price of the bonds is $940 and the market's required yield to
Fingen's 16-year, $1,000 par value bonds pay 15 percent interest annually. The market price of the bonds is $940 and the market's required yield to maturity on a comparable-risk bond is 18 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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Public Finance In Canada
Authors: Harvey S. Rosen, Ted Gayer, Jean-Francois Wen, Tracy Snoddon
5th Canadian Edition
1259030776, 978-1259030772
