(Related to Checkpoint 9.2 and Checkpoint 9.3)(Bond valuation)Fingen's

14-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?

Question content area bottom

Part 1

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