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bond P is premium bond with a coupon rate of 11 percent. Bond D has a coupon rate of 6 percent and is selling at

bond P is premium bond with a coupon rate of 11 percent. Bond D has a coupon rate of 6 percent and is selling at a discount. both bonds make annual payments and have a YTM of 8 percent and have eight years to maturity.

A) What is the current yield for Bond P and Bond D?

B) If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P and Bond D?

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