Fingen's 19-year, $ 1,000 par value bonds pay 9 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 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?

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Part 1

a.What is your yield to maturity on the Fingen bonds given the market price of the bonds?

b.If the yield to maturity on a comparable risk bond is 19 percent, what should be the value of the Fingen bonds?

c.Should you purchase the bond?