Question

Ezzell Enterprises' noncallable bonds currently sell for $1,198.50. They have a 5-year maturity, semi-annual coupon rate of 12.00%, and a par value of $1000. What is the bond's capital gain or loss yield?

Answer 1

Capital gain or loss yield			=	Yield to maturity - Dividend yield
			=	7.20%	-	10.01%
			=	-2.81%
Working:
# 1	Calculation of yield to maturity:
	Yield to maturity		=	=rate(nper,pmt,pv,fv)*2
			=	7.20%
	Where,
	nper	5*12/6			10
	pmt	1000*12%*6/12			$         60.00
	pv				$ -1,198.50
	fv				$   1,000.00
# 2	Calculation of dividend yield :
	Dividend yield		=	Annual dividend/Current Price
			=	(1000*12%)/1198.50
			=	10.01%