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What is the current price of the bonds

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Reference no: EM133063150

Question - Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond with semiannual payments has 7 percent annual interest and has 13 years remaining to maturity. The current yield to maturity on similar bonds is 12 percent.

Required -

a. What is the current price of the bonds?

b. By what percent will the price of the bonds increase between now and maturity?

c. What is the annual compound rate of growth in the value of the bonds?

Reference no: EM133063150

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