What is the expected capital gain or loss

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Reference no: EM132070048

A recent survey revealed that the market expects the 1-year interest rate to be 5% one year from now, down from itís current level of 6%. If these expectations are correct:

1. What is the expected capital gain or loss on a $100 face value 2 year bond?

2. What is the holding period yield on the two year bond assuming it has a face value of $100?

Show all of your work.

Reference no: EM132070048

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