Problem:
You own a 20-year, $1,000 par value bond paying 7.5 percent interest annually. The market price of the bond is $825, and your required rate of return is 11 percent.
Required:
Question 1: Compute the bond's expected rate of return.
Question 2: Determine the value of the bond to you, given your required rate of return.
Question 3: Should you sell the bond or continue to own it?
Explain in detail please provide step by step solution.