Yield To Maturity
Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8%.
a. What is the yield to maturity at a current market price of:
1. $802? Round your answer to two decimal places.
2. $1,055? Round your answer to two decimal places.
b. Would you pay $802 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if rd = 13%?