What is the value of the bond

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Reference no: EM13280089

Consider a bond that makes coupon payments in the following manner: no coupon payments are made for 6 years; after that, the coupon rate will be 5% for 5 years; after that, the coupon rate will be 10% for 8 years. Coupon payments are made annually. The bond matures in 19 years and face value is $12,000. ytm is 8%.

a. What is the value of the bond?

b. Find the current yield and capital gains yield for EACH year of the bond. Explain what you observe.

Reference no: EM13280089

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