The Brownstone Corporation’s bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. What is the yield to maturity...

The Brownstone Corporation’s bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%.

1. What is the yield to maturity at a current market price of: (1) $829 or (2) $1,104?


2. Would you pay $829 for one of these bonds if you thought that the appropriate rate

of interest was 12%—that is, if rd 12%? Explain your answer.