Question

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

Answer #1

a.Information provided:

Future value= $1,000

Coupon rate= 8%

Coupon payment= 0.08*1,000= $80

Time= 12 years

Present value= $935

The yield to maturity is calculated by entering the below in a financial calculator:

FV= 1,000

PMT= 80

N= 12

PV= -935

Press the CPT key and I/Y to calculate the yield to maturity.

The value obtained is 8.90.

Therefore, the yield to maturity is **8.90%.**

b.Yes, you should purchase the bond since it provides a higher return than that of a comparable bond which is only 7%.

In case of any further queries, kindly comment on the solution.

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?

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.)

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?

Fingen's 13-year, $1000 par value bonds pay 12 percent
interest annually. The market price of the bonds is $880 and the
market's required yield to maturity on a comparable-risk bond is
13 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?

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?

(Bond valuation) Fingen's 19-year, $1000 par value bonds
pay 12 percent interest annually. The market price of the bonds is
$1150 and the market's required yield to maturity on a
comparable-risk bond is 9 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?

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