Question
A bond has 4 years tomaturity, a coupon rate of 6.5%, and a face value of $1000. The yield to maturity is 13.6%. Assume annual
A bond has 4 years tomaturity, a coupon rate of 6.5%, and a face value of $1000. The yield to maturity is 13.6%. Assume annual compounding. What is the current price of thebond, the couponyield, and the capital gainyield? Also, what will be the price of the bond when it has 3 years to maturity(one year fromtoday) and what is the percentageincrease/decrease in price during theyear? (Note: use negative signs to indicate decreases and assume that the yield to maturity will remain constant over theone-year period.)
The price of the bond is $nothing. (Round to the nearestcent.)
The coupon yield of the bond is nothing%. (Round to four decimalplaces.)
The capital gain yield is nothing%. (Round to four decimalplaces.)
The price of the bond one year later is $nothing. (Round to the nearestcent.)
The percentage change in price is nothing%. (Round to four decimalplaces.)
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