(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen\'s 13-yea
ID: 2802190 • Letter: #
Question
(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 13-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $950 and the market's required yield to maturity on a comparable-risk bond is 8 percent 7. 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? 96 (Round to two decimal places.) b. What should be the value of the Fingen bonds given your required rate of return on a comparable-bond? (Round to the nearest cent.) c. You (1) drop-down menus.) purchase the Fingen bonds because they are currently (2) (Select from the (1) O should (2) O underpriced O should not O overpricedExplanation / Answer
a)
b)
c)
1) Should 2)underpriced
1 Face value (FV) $ 1,000 2 Coupon rate 9.00% 3 Number of compounding periods per year 1 1*2/3 Interest per period (PMT) $ 90.00 Bond price (PV) $ (950.00) 4 Number of years to maturity 13 5 = 4*3 Number of compounding periods till maturity (NPER) 13 Bond yield to maturity RATE(NPER,PMT,PV,FV) Bond yield to maturity 9.69%Related Questions
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