omsokolova
Dec 17, 2006, 05:18 PM
Suppose you purchase a bond at Par priced to yield 10%. The bond has a principal value of $1000, pays annual coupon payments and a maturity of 5 years. What is the capital gain or loss if you sell the bond after 3 years when interest rates rose to 12%? Compute the current yield and the capital gains yield after 3 years.