Five years ago Dynamic Systems issued a 15-year bond with a $1,000 par value and a 7

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Five years ago Dynamic Systems issued a 15-year bond with a $1,000 par value and a 7 percent coupon rate. Interest is paid semiannually. Today the going interest rate is 10 percent, and it is expected to remain at this level for many years in the future. Compute the

(a) current yield and

(b) capital gains yield that the bond will generate in the fifth year (Year 5) of its life.

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Cfin4 Plus Coursemate Printed Access Card 2014

ISBN: 9781285434544

1st Student Edition

Authors: Scott Besley, Eugene F. Brigham

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