Question
You own a 10-year, $1000 par value bond paying 8percent interest annually. The market price of the bond is $925, and your required rate of
You own a 10-year, $1000 par value bond paying 8percent interest annually. The market price of the bond is $925, and your required rate of return is 11 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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Modern Financial Markets Prices, Yields, And Risk Analysis
Authors: Mark Griffiths, Drew Winters, David W Blackwell
1st Edition
0470000104, 9780470000106
