What is the yield to maturity at current market price

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Reference no: EM131597391

Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 10%.

a) What is the yield to maturity at a current market price of $848? Round your answer to two decimal places.

b) $1,162? Round your answer to two decimal places.

c) Would you pay $848 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if rd = 13%?

1-You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond.

2-You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return.

3-You would buy the bond as long as the yield to maturity at this price is less than your required rate of return.

4-You would buy the bond as long as the yield to maturity at this price equals your required rate of return.

5-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: EM131597391

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