Heymann Company's Bonds: Yield to Maturity
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6-7 The Heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1000 par value; and the coupon interest rate is 9%.
a) What is the yield to maturity at a current market price of (1) $829 or (2) $1104?
b) Would you pay $829 for one of these bonds if you thought that the appropriate rate of interest was 12%-that is, if Rd=12%? Explain your answer.
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Solution Summary
The Yyeld to maturity of Heymann Company's bonds are calculated for different current market prices.
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6-7 The heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1000 par value; and the coupon interst rate is 9%.
a) What is the yield to maturity at a current market price of (1) $829 or (2) $1104?
Yield to maturity
Yield to maturity can be calculated using Excel worksheet function RATE
a) Current Market Price= $829
Data
No of years= 4
Coupon rate= 9.00%
Face value= $1,000
Frequency = A = ...
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