Question

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%

Answer #1

**Answer-**

**Saleemi Corporation's**

**Face value = Par value = FV = $ 1000
Present value = PV = $ 865
Payments = PMT = 7 % x $ 1000 = $ 70
Number of years = N = 14**

**Yield to maturity = YTM = I/Y = ?**

**Substituting all the values in fiinancial calulator we
get**

**YTM = I/Y = 8.7 %**

**The Yield to maturity of the bond = YTM = 8.7
%**

**b)**

**Face value = Par value = FV = $ 1000
Payments = PMT = 7 % x $ 1000 = $ 70
Number of years = N = 14**

**The Yield to Maturity on a comparable risky
bond**

**Yield to maturity = YTM = I/Y = 10 %**

**Present value = PV = ?**

**Input all the values we get**

**Present value = PV = $ 778.99 ~ $ 779**

**One should not purchase the bond at $ 865 if the YTM on
a comparable risky bond = 10 % as it is available at a lower price
of $ 779. **

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 $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 $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

(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...

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?

(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.)

The 14-year, $1,000 par value bonds of Waco Industries pay 9
percent interest annually. The market price of the bond is
$1,065, and the market's required yield to maturity on a
comparable-risk bond is 7 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?
a. What is your yield to maturity on the Waco bonds...

Fingen's 14-year, $1,000 par value bonds pay 14 percent
interest annually. The market price of the bonds is $1,110 and the
market's required yield to maturity on a comparable-risk bond is
11 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 14-year, $1,000 par value bonds pay 9 percent
interest annually. The market price of the bonds is $1,100 and
the market's required yield to maturity on a comparable-risk bond
is 10 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?

(Yield to maturity) Abner Corporation's bonds mature in 19
years and pay 14 percent interest annually. If you purchase the
bonds for $750, what is your yield to maturity?
Your yield to maturity on the Abner bonds is ___%. (Round to
two decimal places.)

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