Check My Wark click here to read the eBook: Bond Yields Click here to read the eBook: Bonds with Semiannual Coupons CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY Pe eer Printing n has bonds outs andin with 9 years le to maturity. The bonds have a 8% annual coupon rate and were issued 1 year ago at ther par value of $1 000 Hu ever due o dlariges n interest rates, he bond's market prie has allen to $910.40. The cap gains yield last year KVas-8.96% a. What is the yield to maturity? Do not rournd intermediate calculations. Round your answer to two decimal places. 36 b. For the coming year, what is the expected current yield? (Hint: Reter to tootnote 7 for the deinition of the current yield and to Table 7.1.) Do not round intermediate caloulations. Round your answer to two decimal places. For the coming year, what is the expected capital gains yield? (Hint: Refer ta footnote 7 for the definitian of the current yield and to Table 71.) Do not round intermediate calculations. Round your answer to two decimal places c. Will the actual realized yields be equal to the expected yields if interest rates change? If not, how will they differ? . As long as promised coupon payments are made, the current yield will change as a result of changing interest rates. However, changing rates will cause the price to change and as a result, the realized return to investors should equal the YTM I. As long as promised coupon payments are made, the current yield will change as a resut of changing interest rates. However, changing rates will not cause the price to change and as result, the realized return to investors should equal the YTM. 111 As rates change they will cause the end-of-year price tu change and thus the realized capital gains yield to change. As a result, the realized return to investors wil differ from the YTM. IV. As long as pramised coupon payments are made, the current yield will change as a resut of changing interest rates. However, changing rates will cause the price to change and as a resul, the realized return to investors will differ from the YTM V As lon as promised coupon payments are made, the aiment yald il nn change as a result of changing inte st rates Hrs ever, chanting rates wil cause he p ce change and as a resu t, the realized r um o investors shou d ual 1 Check My Work Jean K