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(Bond valuation?) You own a 1515?-year, ?$1 comma 0001,000 par value bond paying 6.56.5 percent interest annually. The market price of the...

90.2K

Verified Solution

Question

Finance

(Bond

valuation?)

You own a

1515?-year,

?$1 comma 0001,000

par value bond paying

6.56.5

percent interest annually. The market price of the bond is

?$850850?,

and your required rate of return is

1010

percent.

a. Compute the? bond's expected rate ofreturn.

b. Determine the value of the bond to? you,given your required rate of return.

c. Should you sell the bond or continue to own?it?

Answer & Explanation Solved by verified expert
3.6 Ratings (339 Votes)
aBonds expected rate of return The Bonds expected rate of return is the Yield to maturity of YTM of the Bond is calculated using financial calculator as follows Normally the YTM is calculated either using EXCEL Functions or by using Financial Calculator Variables Financial Calculator Keys Figure Face Value 1000 FV 1000 Coupon Amount 1000    See Answer
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