The goal is to create a table for the rates or return on bonds of varying maturities like the one in the notes for Chapter 4. The bond has a face value of $1000 and is bought at par with a coupon rate of 8%. After one year, the market yield on the bond changes to 9%.

On your table, show the current yield, the resale price P(t+1) the rate of capital gain and the rate of return for bonds is 1,2,3, 5 and 7 years to maturity.

Do a second table for the situation where market yields go from 9% to 8%.

Sample:

Values for a bond bought at par with face value $1000, with yield to maturity of 10% initially, and 15% after 1 year. initial curr yield 0.1 0.1 0.1 0.1 initial P(t) 1000 1000 1000 1000 ROR 0.100 0.057 0.019 0.043 yrs to maturity 1000.000 956.522 918.715 857.251 0.000 0.043 0.081 0.143 Values for a bond bought at par with face value $1000, with yield to maturity of 15% initially, and 10% after 1 year. initial P(t) 1000 1000 1000 1000 ROR 0.150 0.195 0.237 0.308 yrs to maturity initial curr yield 0.15 0.15 0.15 0.15 1000.000 1045.455 1086.777 1158.493 0.000 0.045 0.087 0.158