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Unformatted text preview: is priced such that the yield to maturity is 7%. What is your approximate capital gain/loss (price today + dividend(s) - price paid)? (a) $10 (b) $80 (c) $111 ; Price Today = 80 A 4 . 07 + 1000 / (1 . 07) 4 1033. 1033 + 80 - 1000 = 113. (d) $174 *** Im throwing out this problem. The denition provided for capital gain is incorrect. The correct denition is price today - price paid. Helpful formulae: Net Present Value = C + T t =1 C t (1+ r ) t Annuity: PV = C r 1-1 (1+ r ) t Growing Perpetuity = C r-g...
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- Spring '08