An investor purchases a nine-year, 7% annual coupon payment bond at a price equal to par value. After the bond is purchased and before the first coupon is received, interest rates increase to 8%. The investor sells the bond after five years. Assume that interest rates remain unchanged at 8% over the five-year holding period.

The capital gain/loss per 100 of par value resulting from the sale of the bond at the end of the five-year holding period is closest to a:

A. loss of 8.45.

B. loss of 3.31.

C. gainof2.75.

An investor purchases a nine-year, 7% annual coupon payment bond at a price equal to par value. After the bond is purchased and before the first coupon is received, interest rates increase to 8%. The investor sells the bond after five years. Assume that interest rates remain unchanged at 8% over the five-year holding period. 4. Per 100 of par value, the future value of the reinvested coupon payments at the end of the holding period is closest to: A. 35.00 . B. 40.26 . C. 41.07 . 5. The capital gain/loss per 100 of par value resulting from the sale of the bond at the end of the five-year holding period is closest to a: A. loss of 8.45 . B. loss of 3.31 . c. gainof2.75