In: Finance
Ch 7 #9
Harrimon Industries bonds have 6 years left to maturity.
Interest is paid annually,...
Ch 7 #9
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%.
- What is the yield to maturity at a current market price of
- $805? Round your answer to two decimal places.
%
- $1,176? Round your answer to two decimal places.
%
- Would you pay $805 for each bond if you thought that a "fair"
market interest rate for such bonds was 13%—that is, if
rd = 13%?
- 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.
- 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.
-Select-IIIIIIIVVItem 3