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  3. part 1: 1. a bond was recently quoted at 98. its f

Part 1: 1. A bond was recently quoted at 98. Its face is $1,000 and...

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Finance

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Part 1: 1. A bond was recently quoted at 98. Its face is $1,000 and its coupon is 5%. It matures in 15 years. a. Should you buy the bond if your discount rate is 6%? Why/why not? b. If your discount rate is 4%, should you buy the above bond? Explain. C. Suppose the quote for the bond was 101 rather than 98 and your discount rate is 4%. Should you buy the bond? Explain. a 2. You own a bond that is currently quoted at 97, has a face of $1,000, a coupon of 6% and matures in 10 years. You are considering selling the bond. a. Should you sell it if your discount rate is 7%? Explain. b. Suppose the bond is quoted at 89. Should you sell it? Explain. What is the lowest price for which you would sell the bond? Explain. C

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