Question

The Saleemi Corporation's $1000 bonds pay 9 percent interest annually and have 9 years until maturity. You can purchase the bond for $1125.

a. What is the yield to maturity on this bond?

b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent?

Answer #1

a. The Yield to Maturity (YTM) or yield of a bond is the total expected return for a bond held until maturity.

In the given question, for a bond with Face Value (FV) = 1000, coupon rate = 9%, tenure = 9 years and Present value of bond (PV) = $1125 we can calculate the YTM through the Present Value Discounting method using the financial calculator.

Considering the above values we can calculate that the yield to maturity or YTM of the bond is 7.0753%

b. Yes, we should purchase the bond if the yield to maturity on a co.mparable risk bond is 6% because Saleemi Corporation's bond is paying excess returns for the same level of risk taken

The Saleemi Corporation's $1000 bonds pay 8 percent interest
annually and have 12 years until maturity. You can purchase the
bond for $935. a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a
comparable-risk bond is 7 percent? a. The yield to maturity on
the Saleemi bonds is

The Saleemi Corporation's $1000 bonds pay 6 percent interest
annually and have 14 years until maturity. You can purchase the
bond for $1 075.
a.What is the yield to maturity on this bond?
b.Should you purchase the bond if the yield to maturity on a
comparable-risk bond is 4 percent?
a.The yield to maturity on the Saleemi bonds is __%.

The Saleemi Corporation's $1,000 bonds pay 12 percent interest
annually and have 15 years until maturity. You can purchase the
bond for $905 . a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a
comparable-risk bond is 15 percent?

The Saleemi Corporation's $1,000 bonds pay 7 percent interest
annually and have 14 years until maturity. You can purchase the
bond for $865.
a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a
comparable-risk bond is 10%

(Yield to maturity) The Saleemi
Corporation's $1,000 bonds pay 11 percent interest annually and
have 12 years until maturity. You can purchase the bond for
$955.
a. What is the yield
to maturity on this bond?
b. Should you
purchase the bond if the yield to maturity on a comparable-risk
bond is 10 percent?
1) The yield to
maturity on the Saleemi bonds is__% (Round to two decimal
places.)
--->You should not OR
should not purchase the bonds because your...

(Related to Checkpoint 9.2) (Yield to maturity) The
Saleemi Corporation's
$1 comma 0001,000
bonds pay
1111
percent interest annually and have
88
years until maturity. You can purchase the bond for
$1 comma 0651,065.
a. What is the yield to maturity on this bond?
b. Should you purchase the bond if the yield to maturity on a
comparable-risk bond is
88
percent?
a. The yield to maturity on the Saleemi bonds is _____%.
(Round to two decimal places.)

Fingen's 16-year, $1000 par value bonds pay 9 percent
interest annually. The market price of the bonds is $1,120 and
the market's required yield to maturity on a comparable-risk bond
is 6 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond?

Fingen's 16-year, $1000 par value bonds pay 9 percent interest
annually. The market price of the bonds is $1070 and the market's
required yield to maturity on a comparable-risk bond is 7
percent.
a. Compute the bond's yield to maturity. (round to 2 decimal
places)
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond?

The 11-year, $1000 par value bonds of Waco Industries pay 7
percent interest annually. The market price of the bond is $1135,
and the market's required yield to maturity on a comparable-risk
bond is 4 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you given the market's
required yield to maturity on a comparable-risk bond.
c. Should you purchase the bond?

The 15-year, $1000 par value bonds of Waco Industries pay 8
percent interest annually. The market price of the bond is $1
comma 115, and the market's required yield to maturity on a
comparable-risk bond is 5 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you given the market's
required yield to maturity on a comparable-risk bond.
c. Should you purchase the bond?

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