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Professor Blu is considering buying corporate bonds that were issued five years ago. The bonds have 8 percent coupon (interest is paid semi-annually). $1,000 par
Professor Blu is considering buying corporate bonds that were issued five years ago. The bonds have 8 percent coupon (interest is paid semi-annually). $1,000 par value, and an original maturity of 25 years. The bonds currently sell for $845. What is the bond's yield-to-maturity today? If Prof. Blu requires a 10% annual return on his bond investments, what is the value of this bond to him? Would you recommend the professor to buy this bond? (yes or no, and why?)
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