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(Solved): please show all steps. thank you! (2. Gvarab (see Ursula LeGuin, Dispossessed) purchases a bond whic ...
please show all steps. thank you!
(2. Gvarab (see Ursula LeGuin, Dispossessed) purchases a bond which has 15 years to maturity by paying $1000. The bond has face value of $1000 with 5% coupon rate. Suppose initially the interest rates are 5%, but decrease to 4% within a year of the purchase. S/ he decides to sell the bond. A) Find the initial current yield. B) Find the bond's price a year after the purchase following the first coupon payment. C) Find rate of capital gain. D) Find the rate of return.