Question: orange district hospital issued a 30year 10 percent annual coupon...
Orange District Hospital issued a 30-year, 10 percent annual
coupon bond (par value $1,000) two years ago. The bond now has 28
years remaining to maturity and sells for $1,400. The bond has a
call provision that allows the hospital to call the bond in ten
years at a call price of $1,100. If an investor expects a call and
requires a 6.5 percent rate of return, will the investor be likely
to purchase the bond? Explain your answer