National Steel 15- year, $ 1,000 par value bonds pay 5.5 percent interest annually. The market price

Question:

National Steel 15- year, $ 1,000 bonds pay 5.5 percent interest annually. The market price of the bonds is $ 1,085, and your required rate of return is 7 percent.
a. Compute the bond’s expected rate of return.
b. Determine the value of the bond to you, given your required rate of return.
c. Should you purchase the bond?
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...