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Homework answers / question archive / Consider an 8% coupon, 30-year maturity bond with par value of $1,000

Consider an 8% coupon, 30-year maturity bond with par value of $1,000

Finance

Consider an 8% coupon, 30-year maturity bond with par value of $1,000. The current yield for this bond is 8%. Estimate capital gains if the yield goes to 14%.

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Computation of the capital gains yield:-

Capital gains yield = YTM - Current yield

= 14% - 8%

= 6%