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​(Bond valuation) ​Fingen's 16​-year, $1,000 par value bonds pay 14 percent interest annually. The market price...

  1. ​(Bond valuation) ​Fingen's 16​-year, $1,000 par value bonds pay 14 percent interest annually. The market price of the bonds is $870 and the​ market's required yield to maturity on a​ comparable-risk bond is 15 percent.

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

b.  Determine the value of the bond to​ you, given your required rate of return.

c.  Should you purchase the​ bond?

a.  What is your yield to maturity on the Fingen bonds given the market price of the​ bonds? _______ %       (Round to two decimal​ places.)

--> You should not OR should not purchase the Fingen bonds because they are currently overpriced OR underpriced.

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jeff jeffy answered 1 year ago
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