Question
A bond has 6 years to maturity, a coupon rate of 14.2 %, and a face value of $ 1 comma 000. The yield to
A bond has 6 years to maturity, a coupon rate of 14.2 %, and a face value of $ 1 comma 000. The yield to maturity is 7.1 %. Assume annual compounding. What is the current price of the bond, the coupon yield, and the capital gain yield? Also, what will be the price of the bond when it has 5 years to maturity (one year from today) and what is the percentage increase/decrease in price during the year? (Note: use negative signs to indicate decreases and assume that the yield to maturity will remain constant over the one-year period.)
The price of the bond is $nothing.
(Round to the nearest cent.)
The coupon yield of the bond is
nothing
%.
(Round to four decimal places.)
The capital gain yield is
nothing
%.
(Round to four decimal places.)
The price of the bond one year later is
$nothing
.
(Round to the nearest cent.)
The percentage change in price is
nothing
%.
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