Two and one-half years ago the Province of Saskatchewan sold an issue of 25-year, 6% coupon bonds.

Question:

Two and one-half years ago the Province of Saskatchewan sold an issue of 25-year, 6% bonds. Calculate an investor’s percent capital gain for the entire 2 ½ -year holding period if the current rate of return required in the bond market is:
a. 6.5%.
b. 6%.
c. 5.5%.
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...