Calculate what is the current yield

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Suppose four years ago you purchased a 20-year coupon bond paying 4% interest annually with a face value of $1000. It is now four years later and you just received an interest payment yesterday (the bond matures in exactly 16 years)

a)You look in the paper and the yield on comparable debt is 4% what is the bond currently worth?

b) In you bought it at a Par value, did you have a capital gain or loss? Also, if the yield increased to 5%, would you have a capital gain or loss, or could you tell?

c). What is the current yield?

Reference no: EM132008611

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