A Macrohard Corp. bond carries an 8% coupon, paid annually and has 10 years to maturity. The par value is $1000 and the required rate of return is 5%. ii) Capital gains yield iii) Total rate of return (yield)

A Macrohard Corp. bond carries an 8% coupon, paid annually and has 10 years to maturity. The par value is $1000 and the required rate of return is 5%. ii) Capital gains yield iii) Total rate of return (yield)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...

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Question

A Macrohard Corp. bond carries an 8% coupon, paid annually and has 10 years to maturity. The par value is $1000 and the required rate of return is 5%.

ii) Capital gains yield

iii) Total rate of return (yield)

Definition Definition Increase in the value of a capital asset and the amount that is realized when the asset is sold off. A capital gain may be short-term or long-term depending on the tenure for which the asset is held.

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