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​(Yield to​ maturity) Abner​ Corporation's bonds mature in 25 years and pay 14 percent interest annually....

  1. ​(Yield to​ maturity) Abner​ Corporation's bonds mature in 25 years and pay 14 percent interest annually. If you purchase the bonds for $1,125​, what is your yield to​ maturity?

Your yield to maturity on the Abner bonds is__%        (Round to two decimal​ places.)

​

  1. (Bond valuation)The 8​-year $1,000 par bonds of Vail Inc. pay 8 percent interest. The​ market's required yield to maturity on a​ comparable-risk bond is 11 percent. The current market price for the bond is $920.

a.  Determine the yield to maturity.

b.  What is the value of the bonds to you given the yield to maturity on a​ comparable-risk bond?

c.  Should you purchase the bond at the current market​ price?

1) What is your yield to maturity on the Vail bonds given the current market price of the​ bonds?__% (Round to two decimal​ places.)

--->You should OR should not purchase the Vail bonds at the current market price because they are currently underpriced or overpriced?

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Expert Solution

jeff jeffy answered 2 years ago
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