1 (Yield to maturity) The Saleemi Corporation's $1 comma 000 bonds pay 9 percent interest annually and have 11 years until maturity.You can purchase the bond for $1 comma 065.

a. What is the yield to maturity on this bond?

b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 10 percent?

2 Bond valuation relationships)The 15-year, $1 comma 000 par value bonds of Waco Industries pay 6 percent interest annually.The market price of the bond is $1 comma 155, and the market's required yield to maturity on a comparable-risk bond is 3 percent.

a. Compute the bond's yield to maturity.

b. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond.

c. Should you purchase the bond?

3 (Inflation and interest rates)What would you expect the nominal rate of interest to be if the real rate is 3.7 percent and the expected inflation rate is 7.3 percent?

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