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A 10-year annual coupon bond; coupon rate = 12%; YTM = 8%. [a]. What is the bond price today? [2 points) [b]. Suppose YTM does
A 10-year annual coupon bond; coupon rate = 12%; YTM = 8%. [a]. What is the bond price today? [2 points) [b]. Suppose YTM does not change. What are the current yield and the capital gain yield over the 1st year? Is the capital gain yield positive or negative? Explain why it is positive or negative. [4 points) [c]. Suppose YTM increased to 10% after 1 year. What are the current yield and the capital gain yield over the 19 year? [4 points]
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