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Posted on Jul 27, 2024

If you buy a 12-year 8% coupon bond today (right after the coupon payment) and sell it next year (right after the coupon payment) ,

If you buy a 12-year 8% coupon bond today (right after the coupon payment) and

sell it next year (right after the coupon payment) , what is your expected capital gain yield (i.e.,

by how many % the price of the bond will increase over the year)? Assume the bond pays annual

coupons and YTM=10%

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