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%.
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Question

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%.

  1. What is the yield to maturity at a current market price of

A. $778? Round your answer to two decimal places.

  1.     %

B. $1,058? Round your answer to two decimal places.

b.     %

  1. 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%?


Top Answer

A. If bond price is $778, yield to maturity of bond is 14.56% B. If bond price is... View the full answer

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