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(Related to Checkpoint 9.2 and Checkpoint 9.3)(Bond valuation) The 11-year $1,000 par bonds of Vail Inc. pay 11 percent interest. The market's required yield to
(Related to Checkpoint 9.2 and Checkpoint 9.3)(Bond valuation)The
11-year
$1,000
par bonds of Vail Inc. pay
11
percent interest. The market's required yield to maturity on a comparable-risk bond is
14
percent. The current market price for the bond is
$940.
a.Determine the yield to maturity.
b.What is the value of the bonds to you given the yield to maturity on a comparable-risk bond?
c.Should you purchase the bond at the current market price?
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