Harrimon Industries bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%.
A) What is the yield to maturity at a current market price of $839? Round your answer to two decimal places. (%) $1,152? Round your answer to two decimal places. (%)
Would you pay $839 for each bond if you thought that a "fair" market interest rate for such bonds was 12%-that is, if rd = 12%?
I: You would buy the bond as long as the yield to maturity at this price equals your required rate of return.
II: You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
III: 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.
IV: You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
V: You would buy the bond as long as the yield to maturity at this price is less than your required rate of return.