Erk, Inc. has 6 percent coupon bonds on the market with 5 years to maturity. The bonds make annual coupon payments and currently sell for $875.

Requirement 1: What is the current yield on Erk's bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Current yield %

Requirement 2: What is the yield-to-maturity on Erk's bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Yield to maturity %

Requirement 3: How do you explain the difference between the current yield and the yield to maturity found in Requirements 1 and 2?