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The 12?-year, ?$1,000 par value bonds of Waco Industries pay 12 percent interest annually. The market...

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Finance

The 12?-year, ?$1,000 par value bonds of Waco Industries pay 12percent interest annually. The market price of the bond is ?$955?,and the? market's required yield to maturity on a? comparable-riskbond is 14 percent.

a.??Compute the? bond's yield to maturity.

b.??Determine the value of the bond to you given the? market'srequired yield to maturity on a? comparable-risk bond.

c.??Should you purchase the? bond?

Round to nearest two decimal places:

Answer & Explanation Solved by verified expert
3.6 Ratings (609 Votes)
a Price of bond PV 955 Par value of bond FV 1000 Annual coupon payment PMT 1000 12 120 No of annual coupon payments pending to be received N 12 Therefore Yield to    See Answer
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Transcribed Image Text

The 12?-year, ?$1,000 par value bonds of Waco Industries pay 12percent interest annually. The market price of the bond is ?$955?,and the? market's required yield to maturity on a? comparable-riskbond is 14 percent.a.??Compute the? bond's yield to maturity.b.??Determine the value of the bond to you given the? market'srequired yield to maturity on a? comparable-risk bond.c.??Should you purchase the? bond?Round to nearest two decimal places:

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