1. Today, you purchase a corporate bond with an annual coupon rate of 5.50% and 3 years to maturity.The bond is currently yielding 4.21%.You plan to sell the bond in 1 year when you expect the bond to yield 2.21%. What is the total dollar return you'll receive from capital gain/loss after selling the bond?
2. A 4.25% coupon rate bondwith 5 years left to maturity has a par value of $1,000. What is thechange in the price of this bond if its yield to maturity rises from 3.75% to 4.75%?