Question
Bond P is a premium bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon rate of 5
Bond P is a premium bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon rate of 5 percent. Both bonds make annual payments, a YTM of 7 percent, a par value of $1,000, and have five years to maturity. What is the current yield for Bond P? For Bond D? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
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