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Assume an Investor Buys a Newly Issued 8 Percent, Semi-Annual

Question 15

Multiple Choice

Assume an investor buys a newly issued 8 percent, semi-annual 10 year bond at par. He sells it two years later, when market interest rates have decreased to 6 percent. How much is the investor's capital gain or loss?


A) $1,000 gain
B) $1,125.44 gain
C) $125.44 gain
D) $377.00 loss

Correct Answer:

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