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What is approximate capital gain yield

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Reference no: EM132724158

-A bond has a par value of $1,000, a time to maturity of 8 years, and a coupon rate of 8% with interest paid annually. If the current market price is $765,

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

b) What is its current yield?

c) What is its approximate capital gain yield of this bond over the next year?

-Consider the bond in #1 above. Suppose the interest fall to 10% right after the bond is purchased and stay at that level. What will be the holder's holding period yield if the bond is sold after 2 year?

Reference no: EM132724158

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