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. Bond XYZ is a 4% semi-annual coupon bond with a term to maturity of 8...

. Bond XYZ is a 4% semi-annual coupon bond with a term to maturity of 8 years and is currently trading at par.

(par 1000 )

(a) Calculate the percentage change in the bond price (i.e., the change in bond price divided by the original bond price) if the nominal yield to maturity falls by 0.5%.

(b) A year later, the nominal yield to maturity of the bond is 3.7%, calculate the capital gain yield (i.e., BP1−BP0 BP0 ) for the holding period of one year.. Bond XYZ is a 4% semi-annual coupon bond with a term to maturity of 8 years and is currently trading at par.

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Expert Solution

a)

b)

jeff jeffy answered 2 years ago
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