The government has announced a bond issue of varying maturities. Each bond has a face value of $6,000 and an annual coupon rate of 5%. You are looking to buy some of these bonds with the intention of selling them after a year. Meantime you have heard that the central bank is increasing interest rates to 8% in the months to come. Calculate the following for bonds with different maturity periods as described in the table below.

The government has announced a bond issue of varying maturities. Each bond has a face value of $6,000 and an annual coupon of 5%. You are looking to buy some of these bonds with the intention of selling them after a year. Meantime you have heard that the central bank is increasing interest rates to 8% in the months to come. alculate the following for bonds with differing maturity periods as described in the table below. Coupon Initial yield Price (%) $ Next Year Price $ Years to Years to Fixed Maturity Maturity Coupon when after sale $ bond is (n-1) purchased 1 0 300 5 4 300 Rate of Rate of Capital Return Gain (%) (%) 5% 0 0 6000 6000 5% 6000 -10.63%