Problem:
You own a 20-year, $1,000 par value bond paying 7 percent interest annually. The market price of the bond is $875, and your required rate of return is 10 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?
Note: Please provide full description.