Im 24 and recently won around 30 in an online poker tourn. I am looking for ways to make more money off of it without gambling. That was the best $250 investment ever but I need a better way to make ...
Heymann Company bonds have 4
years left to maturity. Interest is paid annually, and
the bonds have a $1,000 par value and a coupon rate of
a. What is the yield to maturity at a current market
price of (1) $829 or (2) $1,104?
b. Would you pay $829 for each bond if you thought
that a â€śfairâ€ť market interest rate for such bonds was
12 percentâ€”that is, if rd = 12 percent? Explain your
P.S. I have a problem with question b. Question a. is solved
For (1) $829, I find: I/Y: 14.9881%
Yes, you would pay $829 for the bond if the "fair market interest rate" is 12%. At $829, your yield is 14.988%. If the fair yield is 12%, then at a price of $829 you're getting an "extra" 2.988% of yield (14.988-12). So you're getting a bargain.