What is the yield to maturity at current market price

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Reference no: EM131990473

Harrimon Industries 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%.

A) What is the yield to maturity at a current market price of $839? Round your answer to two decimal places. (%) $1,152? Round your answer to two decimal places. (%)

Would you pay $839 for each bond if you thought that a "fair" market interest rate for such bonds was 12%-that is, if rd = 12%?

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

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

III: 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.

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

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

Reference no: EM131990473

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