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Orange District hospital issued a 30 year, 10 percent annual coupon bond (par value $1,000) two years ago. The bond now has 28 years remaining
Orange District hospital issued a 30 year, 10 percent annual coupon bond (par value $1,000) two years ago. The bond now has 28 years remaining to maturity and sells for 41,400. The bond has a call provision that allows the hospital to call the bond in ten years at a call price of $1,100. If an investor expects a call and requires a 6.6 percent rate of return, will the investor be likely to purchase the bond? Explain your answer.
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