(Bond valuation). The 7-year $1000 par bonds of Vail Inc. pay 8% interest. The market's required yield to maturity on a comparable-risk bond is 12%. The current market price for the bond is $880.
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?
--------------------------
a. What is your yield to maturity on the Veil bonds given the current market price of the bonds?
______%
b. What should be the value of the Vail bonds given to yield to maturity on a comparable-risk bond?
$_______