Five years ago you bought a bond with a ten-year maturity, a face value of $1000, a coupon (paid annually) of 3.8 percent. When you bought the bond, it had a yield to maturity of 3.5 percent. You are considering selling the bond; it is currently yielding -0.5 percent.
i) Calculate the price at which you bought the bond and the price at which you sell it if you sold it now
ii) If you sold it now, would you make a capital gain or a capital loss? How much?
iii) You have decided to keep the bond for another few months, what are your expectations about the yield to maturity in the next few months?