Estimate the yield to maturity

Reference no: EM1361165

The Heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $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 of these bonds if you thought that the appropriate rate of interest was 12% - that is, if rd = 12%? Explain your answer

Reference no: EM1361165

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