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?
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?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
(Bond valuation ) The
8-year
$1,000
par bonds of Vail Inc. pay
13
percent interest. The market's required yield to maturity on a comparable-risk bond is
17
percent. The current market price for the bond is
$910.
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?
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