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 8%.
- What is the yield to maturity at a current market price of
A. $778? Round your answer to two decimal places.
B. $1,058? Round your answer to two decimal places.
- Would you pay $778 for each bond if you thought that a "fair" market interest rate for such bonds was 14%—that is, if rd = 14%?
A. If bond price is $778, yield to maturity of bond is 14.56% B. If bond price is... View the full answer