P9-15 (similar to) Question Help Related to Checkpoint 9.2 and Checkpoint 9.3) (
ID: 2802323 • Letter: P
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P9-15 (similar to) Question Help Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) The 7-year $1,000 par bonds of Vail Inc. maturity on a comparable-risk bond is 12 percent. The current market price for the bond is $1,060 pay 15 percent interest e market's required yield to 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? a. What is your yield to maturity on the Vail bonds given the current market price of the bonds? 96 (Round to two decimal places.)Explanation / Answer
a)
b)
c)
Bond value is higher than bond price. I should purchase the bond.
1 Face value (FV) $ 1,000 2 Coupon rate 15.00% 3 Number of compounding periods per year 1 1*2/3 Interest per period (PMT) $ 150.00 Bond price (PV) $ (1,060.00) 4 Number of years to maturity 7 5 = 4*3 Number of compounding periods till maturity (NPER) 7 Bond yield to maturity RATE(NPER,PMT,PV,FV) Bond yield to maturity 13.62%Related Questions
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