Calculate the six-month capital gains yield

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Jocelyn has just bought a 4% bond that pays quarterly coupons with $1,000 face value and 5 years to maturity.

Problem (i) If the yield (APR) of the bond was 6%, what was its purchase price?

Problem (ii) If the bond's YTM (APR) drops to 5% six months later and Jocelyn sells it immediately after receiving the coupon for the quarter, calculate the 6-month capital gains yield.

Reference no: EM132880918

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