Question

Fingen's 15 year, $1000 par value bonds pay 11 percent interest annually. The market price of the bonds is $920 and the market's required yield to maturity on a comparable-risk bond is 14 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?

Answer #1

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Fingen's 15-year, $1,000 par value bonds pay 11 percent
interest annually. The market price of the bonds is $1,070 and
the market's required yield to maturity on a comparable-risk bond
is 12 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?

Fingen's 13-year, $1000 par value bonds pay 12 percent
interest annually. The market price of the bonds is $880 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?

Fingen's 16-year, $1000 par value bonds pay 9 percent
interest annually. The market price of the bonds is $1,120 and
the market's required yield to maturity on a comparable-risk bond
is 6 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?

Fingen's 14-year, $1,000 par value bonds pay 14 percent
interest annually. The market price of the bonds is $1,110 and the
market's required yield to maturity on a comparable-risk bond is
11 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?

Fingen's 14-year, $1000 par value bonds pay 13 percent
interest annually. The market price of the bonds is $1110 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?
a.What is your yield to maturity on the Fingen bonds given the
market price of the bonds?

Fingen's 16-year, $1000 par value bonds pay 9 percent interest
annually. The market price of the bonds is $1070 and the market's
required yield to maturity on a comparable-risk bond is 7
percent.
a. Compute the bond's yield to maturity. (round to 2 decimal
places)
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond?

(Bond valuation) Fingen's 19-year, $1000 par value bonds
pay 12 percent interest annually. The market price of the bonds is
$1150 and the market's required yield to maturity on a
comparable-risk bond is 9 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?

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?

Fingen's 19-year, $, 000 par value bonds pay 8 percent
interest annually. The market price of the bonds is $860 and the
market's required yield to maturity on a comparable-risk bond is
11 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? ___?

(Bond valuation) Fingen's 15-year, $1,000 par value bonds
pay 9 percent interest annually. The market price of the bonds is
$930 and the market's required yield to maturity on a
comparable-risk bond is 8 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?

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