Question
Bellingham bonds have an annual coupon rate of 13 percent and a par value of $1,000 and will mature in 5 years. If you require
Bellingham bonds have an annual coupon rate of 13 percent and a par value of $1,000 and will mature in 5 years. If you require a return of 11 percent, what price would you be willing to pay for thebond? What happens if you pay more for thebond? What happens if you pay less for thebond?
a. The price you would be willing to pay for the bond is __________(Round to the nearestcent.)
b. The bond is not an acceptable investment if you pay ( more/less) for the bond because the expected rate of return for the bond is (less/ greater)
than your required rate of return.
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