(Bond valuation)

You own a 10-year, $1,000 par value bond paying 7 percent interest annually. The market price of the bond is $875, and your required rate of return is 10 percent.

a. What is the expected rate of return of the 10-year, $1,000 par value bond paying 7 percent interest annually if its market price is $875?

b. What is the value of the bond to you, given your 10 percent required rate of return?