Fair market interest rate for such bonds

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Reference no: EM131464309

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 (1) $829 and (2) $1,104?

b. Would you pay $829 for each bond if you thought that a “fair” market interest rate for such bonds was 12%—that is, if rd 12%? Explain your answer

Reference no: EM131464309

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