Problem:
You are considering purchasing some bonds to diversify your investment portfolio.You have $100,000 to invest. You notice that your local city is issuing some bonds to fund the local elementary school building. They are offering $1000 par value bonds for a rate of 6%. These bonds will mature in 20 years. They are selling currently for $465. Given the following yield of maturity, are they a good buy?
a - 4%
b - 6%
c - 8%
After you do the original calculation, you realize that the bonds are your results now?