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1) Bond P is a premium bond with a coupon rate of 11 percent. Bond D has a coupon rate of 6 percent and is
1) Bond P is a premium bond with a coupon rate of 11 percent. Bond D has a coupon rate of 6 percent and is currently selling at a discount. Both bonds make annual payments, have a YTM of 8 percent, and have four years to maturity. What is the current yield for bond P and bond D? 2) If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond P and bond D?
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