Finance homework

| July 28, 2015

High Tech Inc issued a $1,000 par value bond that pays a 10 percent interest annually. The bond matures in 15 years and is currently selling at $1,500. Your required rate of return is 8 percent.

Required:

  1. Compute the bond’s expected rate of return.
  2. Determine the value of the bond to you, given your required rate of return.
  3. If the required rate of return is 4.00%, would the bond be attractive to you at its current

    selling price of $1,500? Why?

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