Annualized ytm-capital gain or loss yield


Problem1: ABC has a 20 year bond that has just been issued with the 8% coupon rate. It pays interest semi-annually and has par value of $1000. It might be called in five years at a price of $1040. The bond is selling right now for $1100 in the open market. Please answer the subsequent questions.

Question1.  What is bond’s annualized YTM?

Question2. What is bond’s current yield?

Question3. What is bond’s capital gain or loss yield?

Question4. What is bond’s annualized YTC?

Question5. Is the YTC less than or more than the YTM? Why is this so?

Question6. What occurs to the price of this bond when market interest rates rise?

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Financial Accounting: Annualized ytm-capital gain or loss yield
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