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Category > Business & Finance Posted 19 May 2017 My Price 8.00

. Robert bought a new issue

. Robert bought a new issue of 10-year bond with a coupon rate equal to 8 percent. If Robert sells the bond at the end of the year when its market price is $925, what return would he earn? What portion of the return is capital gains and what portion is the current yield?

2. On January 2, 2007, a Sunny Communications $1,000 face value, six-year bond sold for $889. Investors who bought this particular bond will be paid interest equal to $40 every six months. Market interest rates did not change until December 31, 2007, when they decreased significantly. On January 2, 2008, the price of the bond was $1,042.

a. What was the bond's yield to maturity on January 2, 2007?

b. What was the bond's yield to maturity on January 2, 2008?

c. What return did investors who bought the bond on January 2, 2007 earn if they sold the bond one year later? What were the capital gains yield and the current yield on the bond in 2007?

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Status NEW Posted 19 May 2017 02:05 PM My Price 8.00

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