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If you are going to sell the bond in two years ie after

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A 12-year bond with a 9% coupon rate, $1,000 face value and semi-annual coupon payments was issued by Fancy Car Ltd five years ago. You bought this bond two years ago when the semi-annually compounded market interest rate was 7% (APR).

(a) How much did you pay for the bond?

(b) If you are going to sell the bond in two years (i.e. after having owned it for four years), and the interest rate is 10% (APR) two years from now, what will be your capital gain/loss yield?

Reference no: EM13620812

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