YOU are considering entering into a free contract that guarantees the right to sell a bond for $1000immediately after it pays its annual coupon of $200. using all available information you establish that based on the intrinsic value of that bond the equilibrium 1year rate of return on the bond is 15% . the bond is currently selling for $1050. should you enter into the contract ? explain why?
According to the efficicient market hypothesis how much should the contract you are offered sale for?