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Bond P is a premium bond with a coupon rate of 8.5 percent. Bond D is a discount bond with a coupon rate of 4.5
Bond P is a premium bond with a coupon rate of 8.5 percent. Bond D is a discount bond with a coupon rate of 4.5 percent. Both bonds make annual payments, have a YTM of 6.5 percent, have a par value of $1,000, and have ten years to maturity. |
a. | What is the current yield for Bond P? For 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? For 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.) |
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