(Bond valuation?) You own a 20?-year, $1,000 par value bond paying 8 percent interest annually. The...
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(Bond valuation?) You own a 20?-year, $1,000 par value bondpaying 8 percent interest annually. The market price of the bond is?$850 and your required rate of return is 11 percent.
a. Compute the? bond's expected rate of return.
b. Determine the value of the bond to? you, given your requiredrate of return.
c. Should you sell the bond or continue to own? it?
(Bond valuation?) You own a 20?-year, $1,000 par value bondpaying 8 percent interest annually. The market price of the bond is?$850 and your required rate of return is 11 percent.
a. Compute the? bond's expected rate of return.
b. Determine the value of the bond to? you, given your requiredrate of return.
c. Should you sell the bond or continue to own? it?
Answer & Explanation Solved by verified expert
3.6 Ratings (262 Votes)
a Current price of the bond can be substituted in the equationbelow to find the expected
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