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A GoodCredit company issued a bond with par value of $1,000.00, a time to maturity of...

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Finance

A GoodCredit company issued a bond with par value of $1,000.00,a time to maturity of 15.00 years, and a coupon rate of 7.90%. Thebond pays interest annually. If the current market price is$790.00, what will be the approximate capital gain on this bondover the next year if its yield to maturity remains unchanged?NOTE: Capital gain is change in bond price. (Do not roundintermediate calculations. Round your answer to 2 decimalplaces.)

Answer & Explanation Solved by verified expert
3.7 Ratings (436 Votes)
To solve this problem we will calculate YTM first using the YTM we will calculate the price of the bond one year later to find the gain on the bond Yield to maturity is the rate of return the investor will get if heshe hold the bold till maturity period So YTM is like internal rate of return if we discount all the cash    See Answer
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