Question: PROBLEM 17. Consider a two-year bond with face value F mte c = 10%, and coupon payments paid quarterly. Suppose the bond is cur- rently

PROBLEM 17. Consider a two-year bond with face value F mte

PROBLEM 17. Consider a two-year bond with face value F mte c = 10%, and coupon payments paid quarterly. Suppose the bond is cur- rently traded at a discount price Bo = 800. Answer the following questions: (1) What is the current yield on this bond? (2) What is the capital gain on this bond if the investor decided to buy the bond today and hold it till maturity? (3) What is the rate of return on this bond if the investor decided to 1000, a coupon buy the bond today and hold it till maturity? (4) What is the yield to maturity on this bond

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