The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds have
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Question:
The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%.
- What is the yield to maturity at a current market price of $829? Round your answer to two decimal places.%
- What is the yield to maturity at a current market price of $1,104? Round your answer to two decimal places.%
- Would you pay $829 for one of these bonds if you thought that the appropriate rate of interest was 14% - that is, if rd= 14%?
-Select-
- Yes
- No
Item 3
- Explain your answer.
- I.You would buy the bond as long as the yield to maturity at this price is less than your required rate of return.
- II.You would buy the bond as long as the yield to maturity at this price equals your required rate of return.
- III.You would buy the bond as long as the yield to maturity at this price does not equal your required rate of return.
- IV.You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return.
- -Select-
- I
- II
- III
- IV
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