Question

Bond valuation)  The 12 year ​$1,000 par bonds of Vail Inc. pay 12 percent interest. The​ market's required yield to maturity on a​ comparable-risk bond is 9 percent. The current market price for the bond is $1,080.

a.  Determine the yield to maturity

b.  What is the value of the bonds to you given the yield to maturity on a​ comparable-risk bond?

c.  Should you purchase the bond at the current market​ price?

Answer 1

a)

b)

c)

Yes, Bond should be purchased.