Question
Hello can you provide assistance with the problems below ? 1. Fingen's 16-year, $1,000 par value...
Hello can you provide assistance with the problems below ?
1. Fingen's 16-year, $1,000 par value bonds pay 14 percent interest annually. The market price of the bonds is $1,150 and the market's required yield to maturity on a comparable-risk bond is 13 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required rate of return.
c. Should you purchase the bond?
2. A bond that matures in 18 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is16 percent.
What would be the value of this bond if it paid interest annually?
What would be the value of this bond if it paid interest semiannually?
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