Question

Assume an investor buys a newly issued coupon rate of 5 percent, semi-annual 24 year bond at par. He sells it two years later, when market interest rates change to 7 percent. How much is the investor's capital gain or loss? (please use or round to 2 decimal places, for example, if your answer is -$78.801, which indicates loss, enter- 78.80; if your answer is $100, which indicate gain, enter 100.00)

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

As nothing was mentioned excel is used.

BOND - Microsoft Excel (Product Activation Failed) Add-Ins View - 2x Dr General Wrap Text Merge & Center - Σ AutoSum : A Fill 2 Sort & m Find & $ -% . File Home Insert Page Layout Formulas Data Review % Cut Calibri -11AA = = = Ea Copy Paste Format Painter B I U B- A Clipboard Font AL28 fax AG AH Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Clear Filter Editing Select Alignment Number Cells AI AJ AK AM AN 26 27 24 28 29 YEARS COUPON PURCHASE PRICE 5% 1000.00 30 31 32 33 34 AFTER 2 YEARS COUPON RATE PAR VALUE YEARS COUPON(S) PERIODS IN A YEAR YTM PRICE TDAY 5.00% 1000 22 50 PAYABLE SEMI ANNUAL 35 36 37 38 7.00% 777.17 (=PV(AJ38/A337,AJ35*AJ37,-AJ36/A137,-AJ34)] 39 P1 40 41 42 43 P1-PO ANSWER CAPITAL GAIN CAPITAL GAIN -222.83 -222.83 44 H N W CLEAN INVOICE PRICE Sheet1 Sheet3 Sheet4 Sheets Sheeto Sheetz Sheets Sheets Sheet10 Sheet11 Sheet12 C ARRANTrefund bond ferences Sheet13 0 BOJ 130% Red 0 0- 01:30 10-08-2019 ELER * NC ENG