A $1,000 face value bond was issued at par 20 years ago with a 6% coupon paid semiannually. The bond now has eight years remaining to maturity and...

A $1,000 face value bond was issued at par 20 years ago with a 6% coupon paid semiannually. The bond now has eight years remaining to maturity and similar debt obligations are yielding 12%.

• Compute the current price of the bond.
• Assuming that the bond is sold at its current price, what is the capital gain or loss from the original purchase?
• Now assume that the price of the bond returns to par. What is the percentage capital gain or loss for the new owner? 
• Please explain why the percentage gain is different from the percentage loss.