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PURCHASE OF AN OUTSTANDING PUCKETT CORPORATION

PURCHASE OF AN OUTSTANDING PUCKETT CORPORATION

It is now January 2, 2012, and you are considering the purchase of an outstanding Puckett Corporatio… It is now January 2, 2012, and you are considering the purchase of an outstanding Puckett Corporation bond that was issued on January 4, 2010. The Puckett bond has a 9.5 percent annual coupon and a 30-year original maturity (it matures on December 30, 2039). Interest rates have declined since the bond was issued, and the bond is currecntly selling for $1,165.75. What is the yield to maturity in 2012 for the Puckett bond? The bonds face value is $1,000. •

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