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What yield to maturity and how much would be willing to pay

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Sampson food company has a 14% annual coupon interest rate on a $1,000 par value bond with 15 years left to maturity. Bonds of same maturity now sell to yield 12% return.

Question (a) How much would you be willing to pay for one of these bonds today? Why?

Question (b) If the bond is selling for $ 1,150 what is the yield to maturity?

Question (c) Will you buy this bond? Explain in detail what key factors you will consider in making your decision.

Reference no: EM132538222

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