Question
Bond Y is a premium bond with a coupon rate of 8 percent. Bond Z is a discount bond with a coupon rate of 6.1
Bond Y is a premium bond with a coupon rate of 8 percent. Bond Z is a discount bond with a coupon rate of 6.1 percent. Both bonds make annual payments with a YTM of 7.1 percent, a par value of $1,000, and six years to maturity. PART 1: What is the current yield for Bond Y? For Bond Z? (find the value of the bond at t=0) PART 2: If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond Y? For Bond Z? (find the value of the bond 1 year from today). If you could complete in excel, Id appreciate, use PV formulas
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