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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 10%.
- What is the yield to maturity at a current market price of
- $841? Round your answer to two decimal places. %
- $1,127? Round your answer to two decimal places. %
- Would you pay $841 for each bond if you thought that a "fair" market interest rate for such bonds was 14%-that is, if rd = 14%?
- 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.
- You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
- You would buy the bond as long as the yield to maturity at this price is less than your required rate of return.
- You would buy the bond as long as the yield to maturity at this price equals your required rate of return.
- You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
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