What is potential gain or loss

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Tinker Spy Corp. has a high-yield junk bond with the following features:

Principal $1,000
Coupon 0% for years 1 through 5 and 10% for years 6 through 10
Maturity 10 years

Problem 1: The current interest rate on comparable debt is 10 percent. If you expect that the in-terest rate will be 8 percent five years from now, what is your potential gain or loss if your expectation is correct and interest rates are 8 percent after five years?

Reference no: EM132906660

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