ceLab

Question $11,$ P$9-17($similar to$)$

HW Score: $66\mathrm{.}61\%,33\mathrm{.}31$ of $50$ points

Part $1$ of $3$

Points: $3\mathrm{.}75$ of $5$

$($Related to Checkpoint $9\mathrm{.}2$ and Checkpoint $9\mathrm{.}3)($Bond valuation relationships$)$ The $19-$year, $$1,000$ par value bonds of Waco Industries pay $7$ percent interest annually. The market price of the bond is $$895,$ and the market's required yield to maturity on a comparable$-$risk bond is $10$ 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?

a$.$ What is your yield to maturity on the Waco bonds given the current market price of the bonds?

$\%($Round to two decimal places.$)$