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2. (15 points) After negative news about corporation's A earnings, its credit rating was reduced from Aaa to Baa. As a result, the yield to
2. (15 points) After negative news about corporation's A earnings, its credit rating was reduced from Aaa to Baa. As a result, the yield to maturity of its twenty-year bond with face value of $1,000, coupon rate of 10% and semiannual payments, increased from 6% to 8%. As a result of the downgrade, what is the capital gain of your portfolio that consists of 100 of such bonds
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