Question
The 13-year, $1000 par value bonds of Waco Industries pay 6 percent interest annually. The market price of the bond is $1 comma 145, and
The 13-year, $1000 par value bonds of Waco Industries pay 6 percent interest annually. The market price of the bond is $1 comma 145, and the market's required yield to maturity on a comparable-risk bond is 3 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?
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Fundamentals Of Corporate Finance
Authors: Richard A. Brealey, Marcus, Alan J, Myers, Stewart C.
2nd Edition
0070074860, 9780070074866
