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Bond P is a premium bond with a coupon rate of 8 percent. Bond D has a coupon rate of 3 percent and is selling
Bond P is a premium bond with a coupon rate of 8 percent. Bond D has a coupon rate of 3 percent and is selling at a discount. Both bonds make annual payments, have a YTM of 5 percent, and have ten years to maturity. a. What is the current yield for Bond P and Bond D? (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 and Bond D? (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.) a. Bond P 7.08% Bond D 3.28% b. Bond P -2.08 % Bond D 1.72%
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