Question 1 Horizon Capital issued 6 per annum bonds on 21 April 2022 that mature on 21 April 2046 The par value of each bond is $1,000 The interest on these bonds is paid, and compounded, annually The bonds are callable on 21 April 2038 at 110 of par value Due to the risk profile of Horizon Capital, investors required a 5 per annum rate of return when these bonds were first issued Determine the value of Horizon Capitals bonds, when they were first issued, if investors did not expect these bonds to be called Determine the value of Horizon Capitals bonds, when they were first issued, assuming investors expected them to be called on the future call date Five years after issuance, these bonds are currently trading at a value of 90 cents on the dollar If you currently require a return of 7 on investments of this perceived risk level, should you buy these bonds as of 21 April 2027 In your answer, please ensure you explain in one sentence why you believe these bonds will be called or not

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Question 1: Horizon Capital issued 6% per annum bonds on 21 April 2022 that mature on 21 April 2046. The par value of each bond

Question 1:

Horizon Capital issued 6% per annum bonds on 21 April 2022 that mature on 21 April 2046. The par value of each bond is $1,000. The interest on these bonds is paid, and compounded, annually. The bonds are callable on 21 April 2038 at 110% of par value. Due to the risk profile of Horizon Capital, investors required a 5% per annum rate of return when these bonds were first issued.

Determine the value of Horizon Capitals bonds, when they were first issued, if investors did not expect these bonds to be called.
Determine the value of Horizon Capitals bonds, when they were first issued, assuming investors expected them to be called on the future call date.
Five years after issuance, these bonds are currently trading at a value of 90 cents on the dollar. If you currently require a return of 7% on investments of this perceived risk level, should you buy these bonds as of 21 April 2027? In your answer, please ensure you explain in one sentence why you believe these bonds will be called or not.