Fingen’s 11-year, $1, 000 par value bonds pay 8 percent interest annually. The market price of the bonds is $1,050 and the market’s required yield to maturity on a comparable-risk bond is 9 percent.
a. Compute the bond’s yield to maturity.
b. Determine the value of the bond to you, given your required rate of return.
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c. Should you purchase the bond?