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Find what percent will the price of the bonds increase

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Reference no: EM132741326

Lance Whiningham IV specializes in buying deep discount bonds. These rep- resent bonds that are trading at well below part value. He has his eye on a bond issued by the Leisure Time Corporation. The $11110 par-value bond pays 4 per- cent annual interest and has 16 years remaining to maturity. The current yield to maturity on similar bonds is 10 percent.

Problem 1: What is the current price ofthe bonds?

Problem 2: By what percent will the price of the bonds increase between now and maturity?

Problem 3: What is the annual compound rate of growth in the value of the bonds? (An approximate answer is acceptable.)

Reference no: EM132741326

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