Question: 1. Bondholders' expected rate of return) Sakara Co. bonds are selling in the market for $1,045. These 15-year bonds pay 7 percent interest annually on a $1,000 par value. If they are purchased at the market price, what is the expected rate of return?

2. (Bondholders' expected rate of return) The market price is $900 for a 10-year bond ($1,000 par value) that pays 6 percent interest (6 percent semiannually). What is the bond's expected rate of return?