Calculate the expected rate of capital gain and loss

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Reference no: EM131245940

Consider a coupon bond that has a $1000 par value and a coupon rate of 10%. The bond is currently selling for $1044.89 and has two years to maturity.

a) What is the bond’s yield to maturity?

b) If the expected price of this bond next year is $1000. Calculate the expected rate of capital gain/loss and the expected rate of return if the bondholder sells it next year?

Reference no: EM131245940

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