A 20-year, 10 percent semiannual coupon bond, with a par value of $1,000 sells for $1,200 (assume that the bond has just been issued today).
1) What is the bond's yield to maturity?
2) What is the bond's current yield?
3) What is the bond's capital gain or loss yield if the bond is purchased today and sold next year. (Hint: Find the values of the bond today and one year after).