Question
Fingen's 18-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $1,150 and the market's required yield to
Fingen's 18-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $1,150 and the market's required yield to maturity on a comparable-risk bond is 6 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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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley Eakins
6th Edition
0321374215, 9780321374219
