In: Finance

Fingen's 13-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $850 and the market's required yield to maturity on a comparable-risk bond is 10 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?

**Part (a):**

Yield to Maturity (YTM)= **11.250311%** calculated
using the RATE function of Excel as follows:

**Part (b):**

Value of the bond at the required YTM of 10%=
**$ 928.97**
calculated using PV function of Excel as follows:

**Part (c):**

YTM of the bond is 11.25%, higher that the market expectation of 10%

As a result, current price of $850 is lower than the intrinsic value of $928.97.

**Hence we shall purchase the bond.**

(Bond valuation)?Fingen's 14?-year, ?$1,000 par value bonds pay
13 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 14 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?...

Fingen's 12-year, $1,000 par value bonds pay 15 percent
interest annually. The market price of the bonds is $880 and the
market's required yield to maturity on a comparable-risk bond is
16 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?

Fingen's 15-year, $1,000 par value bonds pay 12 percent
interest annually. The market price of the bonds is $1,100 and
the market's required yield to maturity on a comparable-risk bond
is 9 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?

Fingen's 15-year, $1,000 par value bonds pay 11
percent interest annually. The market price of the bonds is $920
and the market's required yield to maturity on a comparable-risk
bond is 14 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?

(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...

7) Part 1. (Bond valuation)Fingen's 19?-year,
?$1,000 par value bonds pay 13 percent interest annually. The
market price of the bonds is ?$1,100 and the? market's required
yield to maturity on a? comparable-risk bond is 10 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?
Part 2. (Yield to? maturity) Abner?
Corporation's bonds mature in 19 years and pay 11...

The 11-year, $1,000 par value bonds of Waco Industries pay 9
percent interest annually. The market price of the bond is
$1,095, and the market's required yield to maturity on a
comparable-risk bond is 6 percent. a. Compute the bond's yield to
maturity. b. Determine the value of the bond to you given the
market's required yield to maturity on a comparable-risk bond.
c. Should you purchase the bond?

ExxonMobil 12 year bonds pay 9 percent interest annually on a
$1,000 par value. If the bonds sell at $775 what is the bonds'
expected rate of return? The bonds' expected rate of return is
?

The 16-year, $1,000 par value bonds of Waco Industries pay 11
percent interest annually. The market price of the bond is $945,
and the market's required yield to maturity on a comparable-risk
bond is 10 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you given the market's
required yield to maturity on a comparable-risk bond.
c. Should you purchase the bond?

The 12-year, $1,000 par value bonds of Smith Industries pay 7
percent interest annually. The market price of the bond is $885,
and the market’s required yield to maturity on a comparable-risk
bond is 10 percent.
What is your yield to maturity on the Smith bonds given the
current market price of the bonds? Round to two decimal
places.
What should be the value of the Smith bonds given the market's
required yield to maturity on acomparable-risk bond? Round to...

ADVERTISEMENT

ADVERTISEMENT

Latest Questions

- Taylor’s “Libertarianism”
- Given a system with 4M bytes of address space per process, 64M bytes of physical memory,...
- Explain in your own words the requirements an indeterminate structure should satisfy and name the methods...
- Let P2 be the vector space of all polynomials of degree less than or equal to...
- Develop a python program to create a quiz with limited time and attempts!!! Add comments and...
- Quantitative noninvasive techniques are needed for routinely assessing symptoms of peripheral neuropathies, such as carpal tunnel...
- The Blending Department of Luongo Company has the following cost and production data for the month...

ADVERTISEMENT