EBK FOUNDATIONS OF FINANCE
EBK FOUNDATIONS OF FINANCE
10th Edition
ISBN: 9780135160473
Author: KEOWN
Publisher: PEARSON CO
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Chapter 7, Problem 3SP

(Bond valuation) You own a 20-year, $1,000 par value bond paying 7 percent interest annually. The market price of the bond is $875, and your required rate of return is 10 percent.

  1. a. Compute the bond’s expected rate of return.
  2. b. Determine the value of the bond to you, given your required rate of return.
  3. c. Should you sell the bond or continue to own it?
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EBK FOUNDATIONS OF FINANCE

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What happens to my bond when interest rates rise?; Author: The Financial Pipeline;https://www.youtube.com/watch?v=6uaXlI4CLOs;License: Standard Youtube License