Question
-A Walmart bond you purchased two years ago for $890 is now selling for $925. The bond paid $100 per year in coupon interest on
-A Walmart bond you purchased two years ago for $890 is now selling for $925. The bond paid $100 per year in coupon interest on the last day of each year (the last payment made today). You intend to hold the bond for four more years and project that you will be able to sell it at the end of year 4 for $990. You also project that the bond will continue paying $100 in interest per year. Given the risk associated with the bond, its required rate of return (r) over the next four years is 12.50 percent. Calculate the Bonds price.
- Will you hold the bond for the price calculated above? Please explain shortly your decision: Yes or no? And why?
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