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Fingen's 16​-year, ​$1,000 par value bonds pay 13 percent interest annually. The market price of the...

Fingen's 16​-year, ​$1,000 par value bonds pay 13 percent interest annually. The market price of the bonds is ​$1,140 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?

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Answer #1

a)

Hence, Bond's yield to maturity is 11.09%

b)

Hence, Bond value to me is $1,234.71

c)

Yes, I should purchase the bond.

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