You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest quarterly, will mature in 15 years, and have a coupon rate of 4.50% on a face value of $1,000. Currently, the bon

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You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest quarterly, will mature in 15 years, and have a coupon rate of 4.50% on a face value of $1,000. Currently, the bon

You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest quarterly, will mature in 15 years, and have a coupon rate of 4.50% on a face value of $1,000. Currently, the bonds are selling for $950.

g) If market interest rates remain unchanged, do you think it is likely that the bond will be called in three years? Why or why not?

h) Create a chart that shows the relationship of the bond’s price to your required return. Use a range of 0% to 15% in calculating the prices.

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