Imagine you pay $1,000$ for a coupon bond whose maturity is in $2$ years. The coupon rate is $10\%,$ and the face value is $1,000.$

a$.$ Calculate the "Current Yield"

b$.$ After you receive the first payment, you realize that the interest used to discount future payments has increased to $15\%.$ What is the new price of this bond?

c$.$ Calculate the rate of capital gain.

d$.$ Calculate the rate of return.