Foundations Of Finance
Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 7, Problem 9SP

(Bond valuation) National Steel’s 15-year, $1,000 par value bonds pay 5.5 percent interest annually. The market price of the bonds is $1,085, and your required rate of return is 7 percent.

  1. a. Compute the bond’s expected rate of return.
  2. b. Determine the value of the bond to you given your required rate of return.
  3. c. Should you purchase the bond?
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(Bond valuation) National Steel's 20-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $750, and your required rate of return is 14 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you, given your required rate of return. c. Should you purchase the bond?
(Bond valuation) You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The market price of the bond is $825, and your required rate of return is 12 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you, given your required rate of return. c. Should you sell the bond or continue to own it? ... a. What is the expected rate of return of the 10-year, $1,000 par value bond paying 8 percent interest annually if its market price is $825? % (Round to two decimal places.)
The Saleemi​ Corporation's $1,000 bonds pay 6 percent interest annually and have 11 years until maturity. You can purchase the bond for $1,155. a.  What is the yield to maturity on this​ bond? b.  Should you purchase the bond if the yield to maturity on a​ comparable-risk bond is 3 percent?

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Foundations Of Finance

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What happens to my bond when interest rates rise?; Author: The Financial Pipeline;https://www.youtube.com/watch?v=6uaXlI4CLOs;License: Standard Youtube License