(Bond valuation relationships) Stanley, Inc. issues 15-year $1,000 bonds that pay $95 annually. The market price for the bonds is $1.128. The market's required to maturity on a comparable-risk bond is 8 percent. a. What is the value of the bond to you? b. What happens to the value if the marker's required yield to maturity on a comparable-risk bond () increases to 13 percent or (i) decreases to 6 percent? c. Under which of the circumstances in part b should you purchase the bond? CUD a. What is the value of the bond if the marker's required yield to maturity on a comparable-risk bond is 8 percent? (Round to the nearest cent) b. () What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to 13 percent? $(Round to the nearest cent.) b. (4) What is the value of the bond if the marker's required yield to maturity on a comparable-risk bond decreases to 6 percer? $(Round to the nearest cent.) c. Under which of the circumstances in part (b) should you purchase the bond? (Select from the drop-down menus.) If the yield to maturity on a comparable-risk bond you purchase the Stanley bonds at the current market price of $1,128
(Bond valuation relationships) Stanley, Inc. issues 15-year $1,000 bonds that pay $95 annually. The market price for the bonds is $1.128. The market's required to maturity on a comparable-risk bond is 8 percent. a. What is the value of the bond to you? b. What happens to the value if the marker's required yield to maturity on a comparable-risk bond () increases to 13 percent or (i) decreases to 6 percent? c. Under which of the circumstances in part b should you purchase the bond? CUD a. What is the value of the bond if the marker's required yield to maturity on a comparable-risk bond is 8 percent? (Round to the nearest cent) b. () What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to 13 percent? $(Round to the nearest cent.) b. (4) What is the value of the bond if the marker's required yield to maturity on a comparable-risk bond decreases to 6 percer? $(Round to the nearest cent.) c. Under which of the circumstances in part (b) should you purchase the bond? (Select from the drop-down menus.) If the yield to maturity on a comparable-risk bond you purchase the Stanley bonds at the current market price of $1,128
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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Transcribed Image Text:(Bond valuation relationships) Stanley, Inc. issues 15-year $1,000 bonds that pay $95 annually. The market price for the bonds is $1.128. The market's required yield
to maturity on a comparable-risk bond is 8 percent.
a. What is the value of the bond to you?
b. What happens to the value if the market's required yield to maturity on a comparable-risk bond (1) increases to 13 percent or (i) decreases to 6 percent?
c. Under which of the circumstances in part b should you purchase the bond?
CUL
a. What is the value of the bond if the market's required yield to maturity on a comparable risk bond is 8 percent?
(Round to the nearest cent.)
b. (1) What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to 13 percent?
$(Round to the nearest cent.)
b. (4) What is the value of the bond if the market's required yield to maturity on a comparable-risk bond decreases to 6 percent?
(Round to the nearest cent.)
c. Under which of the circumstances in part (b) should you purchase the bond? (Select from the drop-down menus.)
If the yield to maturity on a comparable-risk bond
V.you
purchase the Stanley bonds at the current market price of $1,128
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