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In: Finance

A 9.5% coupon rate bond (that pays interest every six months), with 4 years until maturity...

A 9.5% coupon rate bond (that pays interest every six months), with 4 years until maturity is selling at $950. An investor with a 10 required rate of return ask your advice. What is your advice regarding the purchase of the bond?

Select one:

A. don't purchase the bond because the bond is overvalued by $34.15

B. purchase the bond because the bond is undervalued by $34.15

C. don't purchase because the bond is overvalued

D. purchase the bond because the bond is undervalued by $33.84

E. not enough data to answer

Solutions

Expert Solution

Answer:- Option D:- purchase the bond because the bond is undervalued by $33.84

Explanation:-

jeff jeffy answered 2 years ago
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