Yield to maturity Heyman 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 percent.
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 each bond if you thought that a "fair" market interest rate for such bonds was 12 percent--that is, if rd=12 percent? Explain your answer.
Attached is a detailed explanation... View the full answer