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Bellingham's bonds have an annual coupon rate of 14 percent and a par value of $1,000...

Bellingham's bonds have an annual coupon rate of 14 percent and a par value of $1,000 and will mature in15 years. If you require a return of 15 ​percent, what price would you be willing to pay for the​ bond? What happens if you pay more for the​ bond? What happens if you pay less for the​ bond?

The price you would be willing to pay for the bond is?

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Answer #1

Hence, I will pay $941.53 for the bond.

If i pay more than $941.53, required return will not be achieved.

If i pay less than $941.53, higher return than the 15% required return will be achieved.

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