Calculation of yield to maturity of bond

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Reference no: EM1314588

Calculation of yield to maturity of Bond

Yield to maturity:

1. Heymann Company bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%.

a. What is the yield to maturity at a current market price of $829? Round the answer to the nearest hundredth. ____%

b. What is the yield to maturity at a current market price of $1,104? Round the answer to the nearest hundredth. _____%

c. Would you pay $829 for each bond if you thought that a \"fair\" market interest rate for such bonds was 14%-that is, if rd = 14%? Choose one.

1. You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return.

Reference no: EM1314588

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