Question
(Bond valuation) You own a 15-year, $1000 par value bond paying 6 percent interest annually. The market price of the bond is $800, and your
(Bond valuation) You own a 15-year, $1000 par value bond paying 6 percent interest annually. The market price of the bond is $800, and your required rate of return is 10 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 sell the bond or continue to own it?
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Options Futures And Other Derivatives
Authors: John C. Hull
3rd Edition
0131864793, 9780306457555
