A 7-year, 11.55% monthly coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,210.85. If the bond is currently trading at $747.51, the capital gains yield of the bond is closest to A. 2.45%. B. 4.72%. C. 7.15%. D. 9.45%.

A 7-year, 11.55% monthly coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,210.85. If the bond is currently trading at $747.51, the capital gains yield of the bond is closest to A. 2.45%. B. 4.72%. C. 7.15%. D. 9.45%.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...

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2.45%.

4.72%.

7.15%.

9.45%.

Definition Definition Increase in the value of a capital asset and the amount that is realized when the asset is sold off. A capital gain may be short-term or long-term depending on the tenure for which the asset is held.

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