Question
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, and have ten years to maturity.
Requirement 3: If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond P? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)
Requirement 4: If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond D? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
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