Bonds have five years remaining to maturity

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Reference no: EM132020400

The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have $ 1,000 par value, and the coupon interest rate is 9%.

a. What is the yield to maturity at a current market price of: (1) $829 or (2) $1,104?

b. Would you pay $829 for one os these bonds if you thought the appropriate of interest was 12%-that is if rd=12%? Explain your answer.

Reference no: EM132020400

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