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c . Suppose that Jenna decides she wants to sell the bond seven years from today when 1 0 years remain until maturity. If the

c. Suppose that Jenna decides she wants to sell the bond seven years from today when 10 years remain
until maturity. If the market rate is 8 percent at the time she sells the bond in seven years, for what
price will Jenna be able to sell the bond? Compute the capital gains yield, current yield, and total
yield that the new investor will earn if he or she holds the bond until it matures 10 years later.
Explain why the capital gains yield is negative each year to maturity. Assume that the market rate
does not change from the time Jenna sells the bond until it matures.

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