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( Bond valuation ) National Steel's 10-year, $1,000 par value bonds pay 11 percent interest annually. The market price of the bonds is $850, and

(Bond valuation)

National Steel's 10-year, $1,000 par value bonds pay 11 percent interest annually. The market price of the bonds is $850, and your required rate of return is 15 percent.

a. What is the expected rate of return of the bond?

b. What is the value of the bond to you, given your 15 percent required rate of return?

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