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.