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De'Andre purchased one of XXXL Shirt Company's bonds last year when the market interest rate on similar-risk bonds was 6 percent. When he purchased the bond, it had seven years remaining until maturity. The bond's coupon rate of interest (paid semiannually) is 5 percent, and its maturity value is $1,000. Today, the market rate on similar-risk bonds as the one De'Andre purchased one year ago is 4 percent. (a) If he were to sell the bond today, what return would De'Andre earn? (b) What portian of this return represents the capital gains, and what portion represents the current yield?

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Category:- Basic Finance
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