In your position as a financial advisor, you have been asked to value a consol bond that pays $85 every six (6) months forever. The first payment will occur in exactly 7 years an the appropriate interest rate is 2.8% compounded semiannually. The consol bond is currently selling for $5,200. What is your recommendation for this consol bond?
a. You do not recommend making this investment. The consol bond costs less that it is worth.
b. You would recommend investing in this consol bond, since it is worth less than it costs.
c. You would recommend investing in this bond, but only to investors who are comfortable with a significant amount of risk.
d. You do not recommend making this investment. This consol bond costs more than it is worth.
e. There is not enough information provided to answer this question.