Suppose you buy a bond today with a par value of $1000, a 6-year maturity, and a 9% coupon rate. The coupons are paid annually, and the bond's current market price is $830.80. You decide to hold the bond for 3 years, and then sell it. Suppose the bond's yield to maturity changes to 15% immediately after you purchase the bond.

a) Compute the capital gain or loss when you sell the bond.

b) Compute the annualized rate of return at the end of year 3 from your investment in the bond.