Discount rate of bond, Bond was recently quoted at 98. Its

Discount rate of bond

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Reference no: EM131341440

Bond was recently quoted at 98. Its face is $1,000 and its coupon is 5%. It matures in 15 years.

A. Should you buy the bond if your discount rate is 6%? Why/why not?

B. If your discount rate is 4%, should you buy the above bond? Explain.

C. Suppose the quote for the bond was 101 rather than 98 and your discount rate is 4%. Should you buy the bond? Explain.

Reference no: EM131341440

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