Problem:
A corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%.
Required:
Question 1: What is the yield to maturity at a current market price of (1) $829 or (2) $1,104?
Question 2: Would you pay $829 for one of these bonds if you thought that the appropropriate rate of interest was 12% - that is, if rd = 12%?
Note: Explain in detail and show all computations in proper way.