Problem 7-9 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 8%.

What is the yield to maturity at a current market price of $821? Round your answer to two decimal places:

a.$821? Round your answer to two decimal places.

b.$1,042? Round your answer to two decimal places.

c.Would you pay $821 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if rd = 13%?

-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.

-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.