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Ron Rhodes calls his broker to inquire about purchasing a bond of Golden Years Recreation Corporation. His broker quotes a price of $1,130. Ron is concerned that the bond might be overpriced based on the facts involved. The $1,000 par value bond pays 12 percent annual interest payable semiannually has 20 years remaining until maturity. The current yield to maturity on similar bonds is 10 percent.

a. Compute the new price of the bond.

?b. Bond is overpriced or not

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92810175

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