(Bond valuation) National Steel 15-year, $1,000 par value bonds pay 8 percent interest annually. The market price of the bonds is $1,085, and your required rate of return is 10 percent.
a. Compute the bond’s expected rate of return.
The expected rate of return is 7%
b.Determine the value of the bond to you, given your required rate of return.
c.Should you purchase the bond?