Fair market interest rate for such bonds

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Reference no: EM131568290

Heymann Company bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%.

What is the yield to maturity at a current market price of $779? Round your answer to two decimal places.

$1,105? Round your answer to two decimal places.

Would you pay $779 for each bond if you thought that a "fair" market interest rate for such bonds was 14%-that is, if rd = 14%?

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

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

c You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return.

d 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.

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

Reference no: EM131568290

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