Math Problem Statement
The Saleemi Corporation's $1 comma 000 bonds pay 8 percent interest annually and have 13 years until maturity. You can purchase the bond for $895. 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 8 percent? only answer do not show steps or tips
Solution
a. The yield to maturity (YTM) on the Saleemi Corporation's bond is approximately 9.29%.
b. Yes, you should purchase the bond since its YTM of 9.29% is higher than the 8% yield on a comparable-risk bond.
Ask a new question for Free
By Image
Drop file here or Click Here to upload
Math Problem Analysis
Mathematical Concepts
Finance
Bonds
Yield to Maturity
Formulas
Yield to Maturity (YTM) formula
Theorems
Time Value of Money
Suitable Grade Level
College/University
Related Recommendation
Yield to Maturity Calculation for Saleemi Corporation Bonds
Calculate Yield to Maturity (YTM) on Saleemi Corporation's $1,000 Bonds
Calculate Yield to Maturity for Saleemi Corporation Bond
Calculate Yield to Maturity (YTM) for Saleemi Corporation's $1,000 Bonds
Waco Industries 13-Year Bond: Yield to Maturity and Valuation