Fingen's 19​-year, ​$1,000 par value bonds pay 11 percent interest annually. The market price of the bonds is ​$1,050 and the​ market's required yield to maturity on a​ comparable-risk bond is 12 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?

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
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​(Related to Checkpoint 9.2 and Checkpoint​ 9.3)  ​(Bond valuation)  ​Fingen's
19​-year,
​$1,000
par value bonds pay
11
percent interest annually. The market price of the bonds is
​$1,050
and the​ market's required yield to maturity on a​ comparable-risk bond is
12
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?
a.  What is your yield to maturity on the Fingen bonds given the market price of the​ bonds?
 
nothing​%
​(Round to two decimal​ places.)
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