Compute the bond yield to maturity

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Reference no: EM132037027

Part 1. (Bond valuation) Fingen's 19-year, $1,000 par value bonds pay 13 percent interest annually. The market price of the bonds is $1,100 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?

Part 2. (Yield to maturity) Abner Corporation's bonds mature in 19 years and pay 11 percent interest annually. If you purchase the bonds for $850, what is your yield to maturity? (Round to two decimal places.)

Reference no: EM132037027

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