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The 7​-year ​$1 comma 000 par bonds of Vail Inc. pay 9 percent interest. The​ market's required yield to maturity on a​ comparable-risk bond is 7 percent. The current market price for the bond is $ 1 comma 100. 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?

Answer :

abdullahfarooqi

Answer:

a) Yield to maturity = 8.14%

b) The value of the bonds = $917.99

c) Since market value of bond is higher than book value of bond. So investor should not purchase the bond.

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