Question
Q2. Suppose there is a newly issued bond with 10% of coupon rate, annual coupon payment, face value of $1,000, 10 years to maturity and
Q2. Suppose there is a newly issued bond with 10% of coupon rate, annual coupon payment, face value of $1,000, 10 years to maturity and YTM is 8%. Now, compute the current price, Current yield, and then the price at the beginning of next year, Capital gain yield over the 1st year. Finally based on your computation, prove that YTM = Current yield + Capital gain yield.
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Fundamentals of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
5th edition
205989756, 978-0205989751
