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.
- Compute the bond’s expected rate of return.
- Determine the value of the bond to you, given your required rate of return.
- 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?