A bond offers a coupon rate of 4%, paid annually, and has a maturity of 5...

A bond offers a coupon rate of 4%, paid annually, and has a maturity of 5 years. The current market yield is 9%. If market conditions remain unchanged, what should be the Capital Gains Yield of the bond?

Expert Solution

Step-1:Calculation of current price of bond

Current price	=	=-pv(rate,nper,pmt,fv)
	=	$ 805.52

Where,
rate	Market yield		9%
nper	Number of period		5
pmt	Coupon payment		$ 40
fv	Face value		$ 1,000

Step-2:Calculation of current yield

Current yield	=	Annual coupon	/	Current price
	=	$ 40	/	$ 805.52
	=	4.97%

Step-3:Calculation of Capital gain Yield

Capital Gain Yield	=	Market yield	-	Current yield
	=	9%	-	4.97%
	=	4.03%

Capital gain yield should be 4.03%

jeff jeffy answered 1 year ago

4. A bond offers a coupon rate of 6%, paid annually, and has a maturity of...

4. A bond offers a coupon rate of 6%, paid annually, and has a maturity of 11 years. The current market yield is 3%. If market conditions remain unchanged, what should the price of the bond be in 1 year?

5. A bond offers a coupon rate of 7%, paid annually, and has a maturity of...

5. A bond offers a coupon rate of 7%, paid annually, and has a maturity of 18 years. If the current market yield is 9% (discount rate), what should be the price of this bond? 6. A bond offers a coupon rate of 10%, paid semiannually, and has a maturity of 6 years. If the current market yield is 6%, what should be the price of this bond?

A) A bond offers a coupon rate of 12%, paid annually, and has a maturity of...

A) A bond offers a coupon rate of 12%, paid annually, and has a maturity of 16 years. The current market yield is 14%. Face value is $1,000. If market conditions remain unchanged, what should be the Capital Gains Yield of the bond? B) You own a bond with the following features: face value of $1000, coupon rate of 5% (semiannual compounding), and 15 years to maturity. The bond has a current price of $1,115. The bond is callable after...

A) A bond offers a coupon rate of 9%, paid annually, and has a maturity of...

A) A bond offers a coupon rate of 9%, paid annually, and has a maturity of 14 years. The current market yield is 10%. Face value is $1,000. If market conditions remain unchanged, what should the price of the bond be in 1 year? Assume the market yield remains unchanged. B) A bond currently trades at a price of $852.72 in the market. The bond offers a coupon rate of 7%, paid annually, and has a maturity of 15 years....

A bond offers a coupon rate of 3%, paid annually, and has a maturity of 19...

A bond offers a coupon rate of 3%, paid annually, and has a maturity of 19 years. Face value is $1,000. If the current market yield is 11% (discount rate), what should be the price of this bond? Enter your answer in dollars, without the dollar sign ('$'), and rounded to the nearest cent (2 decimals).

A bond offers a coupon rate of 6%, paid annually, and has a maturity of 9...

A bond offers a coupon rate of 6%, paid annually, and has a maturity of 9 years. The current market yield is 14%. If market conditions remain unchanged, what should be the Capital Gains Yield of the bond?

A bond offers a coupon rate of 6%, paid annually, and has a maturity of 6...

A bond offers a coupon rate of 6%, paid annually, and has a maturity of 6 years. If the current market yield is 7% (discount rate), what should be the price of this bond? Enter your answer in dollars, without the dollar sign ('$'), and rounded to the nearest cent (2 decimals).

A bond offers a coupon rate of 7%, paid annually, and has a maturity of 10...

A bond offers a coupon rate of 7%, paid annually, and has a maturity of 10 years. The current market yield is 9%. If market conditions remain unchanged, what should be the Capital Gains Yield of the bond? Enter your answer as a percentage, without the percentage sign ('%'), and rounded to 2 decimals. Use the minus sign ('-') if the yield is negative.

A bond offers a coupon rate of 5%, paid semiannually, and has a maturity of 20...

A bond offers a coupon rate of 5%, paid semiannually, and has a maturity of 20 years. If the current market yield is 8%, what should be the price of this bond?

A $1,000 bond with a coupon rate of 5% paid semi-annually has 7 years to maturity...

A $1,000 bond with a coupon rate of 5% paid semi-annually has 7 years to maturity and a yield to maturity of 9%. The price of the bond is closest to $________. Input your answer without the $ sign and round your answer to two decimal places.

Question