The Brownstone Corporation bonds have 10 years remaining to maturity. Interest is paid annually; the bonds have a $1,000 par value; and the coupon interest rate is 9%.

a. What is the yield to maturity at a current market price of (1) $875 or (2) $1,080?

b. Would you pay $875 for one of these bonds if you thought that the appropriate rate of interest was 10%-that is, if rd = 10%? Explain your answer.