Related to Checkpoint 9.2 and Checkpoint? 9.3) ?(Bond valuation) The
14?-year
?$1,000
par bonds of Vail Inc. pay
12
percent interest. The? market’s required yield to maturity on a? comparable-risk bond is
15
percent. The current market price for the bond is
$890.
a. Determine the yield to maturity.
b. What is the value of the bonds to you given the yield to maturity on a? comparable-risk bond?
c. Should you purchase the bond at the current market? price?
a. What is your yield to maturity on the Vail bonds given the current market price of the? bonds?
nothing?%
? (Round to two decimal? places.)
b. What should be the value of the Vail bonds given the yield to maturity on a comparable risk? bond?
?$nothing
?(Round to the nearest? cent.)
c. You
?
should not
should
purchase the Vail bonds at the current market price because they are currently
?
overpriced
underpriced
