You believe that the risk free rate then will remain at 4, Financial Management

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You believe that the risk free rate then will remain at 4

Based on the following information concerning Daves bonds:

Par value: $1,000

Years to maturity: 15 years

Coupon rate: 8% paid semiannually

Beta: 0.1

Risk-free rate: 4%

Market risk premium: 5%

What is the expected price of the bond in 4 years? You believe that the risk free rate then will remain at 4% but the market risk premium is like to rise to 10% due to a worsening economic outlook.

a. $1,274.01

b. $1,263.87

c. $1,259.33

d. $1,251.48

e. $1,282.64

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Financial Management: You believe that the risk free rate then will remain at 4

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Financial Management: You believe that the risk free rate then will remain at 4

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