You hold two semi-annual coupon bonds in an investment portfolio. The first bond is a 5-year, zero coupon bond that currently yields 3.55%. The second bond is a 7-year bond with a 5.2% coupon rate and a current price of $908. If all interest rates in the economy decrease by 0.5%, what will be the capital gain (in dollars and percentage) on this portfolio?

Answer rating: 100% (QA)

To calculate the capital gain on the portfolio due to a decrease in interest rates we need to consid... View the full answer