1.
Using financial calculator:
N=18
PMT=12%*1000=120
FV=1000
PV=-1090
CPT I/Y=10.843%
Hence, yield to maturity is 10.843%
2.
Value of bond at required rate of return:
N=18
PMT=12%*1000=120
I/Y=9%
FV=1000
CPT PV=1262.67
Hence, value of bond is 1262.67
3.
As the bond is selling at less than the intrinsic value, one should
purchase the bond
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