Question

  ​Fingen's 14​-year, ​$1,000 par value bonds pay 9 percent interest annually. The market price of the...

  ​Fingen's 14​-year, ​$1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is ​$1,100 and the​ market's required yield to maturity on a​ comparable-risk bond is 10 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?

Homework Answers

Answer #1

Ans to point (c)- In this question ,Price of Bond is less than the Market value of Bond, I should not purchase the bond. In this case I should sell the bond.

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