Compute the bond yield to maturity

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Question - Bond valuation relationships

The 19-year, $1,000 par value bonds of Waco Industries pay 6 percent interest annually. The market price of the bond is $905, and the market's required yield to maturity on a comparable-risk bond is 8 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?

D) What is your yield to maturity on the Waco bonds given the current market price of the bonds?

Reference no: EM132786362

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