a. The YTM of the bond is 10.42%. Given this i) What is the bond's current yield? ii) What is the bond’s capital gains yield?

b. Assume that the YTM remains constant over the bond’s 5-year term. Given this i) What will the bond price be one year from its initial issuance (with four years left in its term)? ii) What will be the bond’s current yield and capital gains yield one year from its initial issuance?

c. What will be the bond price three years from its initial issuance (with two years left in its term)? What will be the bonds current yield and capital gains yield three years from its initial issuance?

d. What will be the bond’s price five years from its initial issuance?

e. Assume that one year into the bond’s term market interest rates increase to 14%. Calculate the bond price and your realized rate of return if you decide to sell the bond at that time?

f. Assume that one year into the bond’s term market interest rates decrease to 4%. Calculate the bond price and your realized rate of return if you decide to sell the bond at that time?

Maturity value= $1,000 , coupon rate=12%, years to maturity=14 years , bond price=N/A.

Answer rating: 100% (QA)

Assuming Face value of bond is 100 a i Current Yield Annual Coupon InterestBond Price 77590 861 ii S... View the full answer