Question
An investor with a 4-year investment horizon purchases a bond that pays coupons annually at a rate of 7%. At the time of purchase, the
An investor with a 4-year investment horizon purchases a bond that pays coupons annually at a rate of 7%. At the time of purchase, the bond has 10 years left to maturity and is selling at 107.3601 per hundred of par, with a YTM of 6%. After the purchase but before the first coupon payment, interest rates rise to 9% , remaining at this rate through the investment horizon. The investor's realized yield at the end of the investment period is ______ % and what is the investor's capital gain or loss at the end of the investment horizon? Please show work
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