(Yield to maturity)The Saleemi Corporation's $1,000 bonds pay 8 percent interest annually and have 14 years until maturity. You can purchase the bond for $1,075.

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 6 percent?

(Bond valuation relationships)A bond of Telink Corporation pays $120 in annual interest, with a $1,000 par value. The bonds mature in 15 years. The market's required yield to maturity on a comparable-risk bond is 8 percent.

a.Calculate the value of the bond.

b.How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 14 percent or (ii) decreases to 4 percent?

c.Interpret your findings in parts a and b