Problem: The Heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1000 par value; and the coupon interest rate is 9%.
a) What is the yield to maturity at a current market price of (1) $829 or (2) $1104?
b) Would you pay $829 for one of these bonds if you thought that the appropriate rate of interest was 12%-that is, if Rd=12%? Explain your answer.