Question
On April 1 st , 2018, Yugo purchased a corporate bond of IJK Limited for its face value of $1,000.The bond pays a 2.5 percent
On April 1st, 2018, Yugo purchased a corporate bond of IJK Limited for its face value of $1,000.The bond pays a 2.5 percent coupon rate, which are paid semi-annually, and it will be maturing on April 1st, 2028.On April 1st, 2020, similar bonds are paying a coupon rate of 2.75 percent, and Yugo plans to sell this bond.
1# What would be the dollar amount of each semi-annual coupon, Yugo would receive?
2#What would be the market price of the IJK bonds on April 1st, 2020, based on the market coupon rate?
3#What would be the capital gains/loss ($ dollar amount) would Yugo receive from selling the IJK bond?
4#What would be the capital gains/loss (% percent return) would Yugo receive from selling the IJK bond?
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