Answer the following questions with explanations:

Part 1: Analyze the 10-year, 8% coupon rate (semi annual payment), $1000 par value bond. The bond currently sells for $1318. Whats the bonds current yield, and capital gain yield?

A. 6.07%, 0.71%

B. 6.07%, -0.71%

C. 6.07%, 1.97%

D. 6.07%, -1.97%

Part 2: Analyze the 10-year, 8% coupon rate (semi-annual payment), $1000 par value bond. The bond currently sells for $1318. Whats the bonds yield to maturity?

A. 5.36%

B. 4.10%

C. 2.05%

D. 6.15%

Part 3: If you earned a rate of return of 8% on your bond investments last year. During that time the inflation rate was 2.68%. What is your real rate of return?

A. 5.18%

B. 4.17%

C. 3.68%

D. 6.20%