(Related to Checkpoint 9.2 and Checkpoint 9.3)(Bond valuation relationships) The

11-year,

$1,000

par value bonds of Waco Industries pay

9

percent interest annually. The market price of the bond is

$945,

and the market's required yield to maturity on a comparable-risk bond is

11

percent.

a.Compute the bond's yield to maturity.

b.Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond.

c.Should you purchase the bond?

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