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Bond P is a premium bond with a coupon rate of 9.8 percent. Bond D is a discount bond with a coupon rate of

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Bond P is a premium bond with a coupon rate of 9.8 percent. Bond D is a discount bond with a coupon rate of 5.8 percent. Both bonds make annual payments, a YTM of 7.8 percent, a par value of $1,000, and have thirteen years to maturity. a. 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. b. 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. Answer is complete but not entirely correct. Bond P Bond D a. Current yield 8.45 % 5.96% b. Capital gains yield -0.65 % 0.90 %

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