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(Bond valuation relationships)A bond of Visador Corporation pays
$70
in annual interest, with a
$1,000
par value. The bonds mature in
17
years. The market's required yield to maturity on a comparable-risk bond is
9.5
percent.
a.Calculate the value of the bond.
b.How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to
12
percent or (ii) decreases to
6
percent?
c.Interpret your finding in parts a and
b.
Answer & Explanation
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