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A bond has a par value of $1,000, a time to maturity of 8 years, and a coupon rate of 8% with interest paid annually.
- A bond has a par value of $1,000, a time to maturity of 8 years, and a coupon rate of 8% with interest paid annually. If the current market price is $765,
a) What is the bond's yield to maturity?
b) What is its current yield?
c) What is its approximate capital gain yield of this bond over the next year?
- Consider the bond in #1 above. Suppose the interest fall to 10% right after the bond is purchased and stay at that level. What will be the holder's holding period yield if the bond is sold after 2 year?
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
15th edition
134796551, 134796550, 978-0134796550
