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1 (Yield to​ maturity) The Saleemi​ Corporation's ​$1 comma 000 bonds pay 9 percent interest annually and

have 11 years until maturity. You can purchase the bond for ​$1 comma 065.

a. What is the yield to maturity on this​ bond?

b. Should you purchase the bond if the yield to maturity on a​ comparable-risk bond is 10 ​percent?

2 Bond valuation​ relationships) The 15​-year, ​$1 comma 000 par value bonds of Waco Industries pay 6 percent interest annually. The market price of the bond is ​$1 comma 155​, and the​ market's required yield to maturity on a​ comparable-risk bond is 3 percent.

a. Compute the​ bond's yield to maturity.

b. Determine the value of the bond to you given the​ market's required yield to maturity on a​ comparable-risk bond.

c. Should you purchase the​ bond?



3 ​(Inflation and interest rates​) What would you expect the nominal rate of interest to be if the real rate is 3.7 percent and the expected inflation rate is 7.3 ​percent?



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