Question
Ron Rhodes calls his broker to inquire about purchasing a bond of Golden Years Recreation Corporation. His broker quotes a price of $1,160. Ron is
Ron Rhodes calls his broker to inquire about purchasing a bond of Golden Years Recreation Corporation. His broker quotes a price of $1,160. Ron is concerned that the bond might be overpriced based on the facts involved. The $1,000 par value bond pays 14 percent annual interest payable semiannually, and has 10 years remaining until maturity. The current yield to maturity on similar bonds is 12 percent.
a. Compute the new price of the bond. (Round "PV Factor" to 3 decimal places. Do not round intermediate calculations. Round the final answer to 2 decimal places.)
New price of the bond $
b. Do you think the bond is overpriced?
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Auditing A Risk Based Approach to Conducting a Quality Audit
Authors: Karla Johnstone, Audrey Gramling, Larry E. Rittenberg
10th edition
978-1305080577
