In: Finance

# The 12​-year, ​$1,000 par value bonds of Waco Industries pay 12percent interest annually. The market... The 12-year,$1,000 par value bonds of Waco Industries pay 12 percent interest annually. The market price of the bond is $1,135, and the market's required yield to maturity on a comparable-risk bond is 9 percent. Compute the bond's yield to maturity. 1. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond. ## Solutions ##### Expert Solution Face Value of Bond =$1000

Annual Coupon Payment = $1000*12% =$120

No of years to maturity = 12 years

a). Current Market Price of Bond = $1135 Calculating the Yield to Maturity of Bond using Excel "RATE" Function:- So,the Yield to Maturity(YTM) of Bond is 10.02% b). Market Yield to Maturity on comparable bond is 9% Calculating the Price of Bond using excel "PV" function:- So, Price of Bond based on Market Yield to Maturity on comparable bond is$1,214.82

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