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    Bonds : Yield Capital Gain/Loss

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    Suppose you have a bond, with a par value of $1000, that pays interest twice a year at the rate of 12%. You paid $853.29 when you purchased this bond

    a) Calculate the interest rate yield of your bond.

    b) You are selling this bond today and will receive $ 936.33 for it. What is the capital gain/loss?

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    Solution Preview

    a) Calculate the interest rate yield of your bond
    payment = $1000 * 12% / 2 = $60 each period
    Cost ...

    Solution Summary

    Interest rate and capital gain/loss are investigated.