Stanley, Inc. issues

15-year

$1,000

bonds that pay

$85

annually. The market price for the bonds is

$1,137.

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

7

percent.

What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is

7

percent?

$enter your response here

(Round to the nearest cent.)

Part 2

b. (i)What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to

13

percent?

$enter your response here

(Round to the nearest cent.)

Part 3

b. (ii)What is the value of the bond if the market's required yield to maturity on a comparable-risk bond decreases to

5

percent?

$enter your response here

(Round to the nearest cent.)

Part 4

c.Under which of the circumstances in part (b) should you purchase the bond? (Select from the drop-down menus.)

If the yield to maturity on a comparable-risk bond

increases to 13%

decreases to 5%

, you

should

should not

purchase the Stanley bonds at the current market price of

$1,137.