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Heymann-Company-bonds-have-4-years-left-to-maturity-Interest-is-paid-annually-and-the-bonds-have-a-1000-par-value-an

Yield to maturity -  Heymann Company bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9 percent.

a. What is the yield to maturity at a current market price of (1) $829 or (2) $1,104?

b. Would you pay $829 for each bond if you thought that a “fair” market interest rate for such bonds was 12 percent—that is, if rd = 12 percent? Explain your answer.
 
File name: Heymann-Company.doc File type: application/msword Price: $4

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