Q5

(Bond valuation) National Steel's 15-year, $1,000 par value bonds pay 11 percent interest annually. The market price of the bonds is $725, and your required rate of return is 17 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 purchase the bond? . a. What is the expected rate of return of the bond? % (Round to two decimal places.) b. What is the value of the bond to you, given your 17 percent required rate of return? $ (Round to the nearest cent.) c. Should you purchase the bond? (Select the best choice below.) O A. Yes. Since the expected rate of return is more than your required rate of return, the bond is an acceptable investment. OB. No. Since the expected rate of return is less than your required rate of return, the bond is not an acceptable investment O C. Yes. Since the expected rate of return is less than your required rate of return, the bond is an acceptable investment. OD. No. Since the expected rate of return is more than your required rate of return, the bond is not an acceptable investment