JD Appliances Inc. (JDA) has just issued semi-annual coupon bonds with 10 years to maturity and a face value of $1,000 per bond. The bonds make semi-annual coupon payments of $50.

23. Suppose in seven years, when the yield-to-maturity (APR, semi-annually compounded) is 10%, you

purchase a JDA-bond (right after the bond made its coupon payment). You hold the bond for six months,

and sell it right after the bond made its $50 coupon payment. What would be your capital gain/loss yield

(remember, the capital gain/loss yield is the return resulting from price changes of your investment)?

The yield-to-maturity remains unchanged during that time.

a) 0% b) 2% c) 5% d) 7% e) 10%

Please use equations to explain instead of excel, graphs, and financial calculator