Question
Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 8% annual coupon rate and were issued 1 year
Hooper Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $901.40 The capital gains yield last year was -9.86%.
What is the yield to maturity?
For the coming year, what are the expected current and capital gains yield?
Will the actual realized yields be equal tot he expected yields if interest rates change? If not, how will they differ?
(Please explain well I am completely lost with this.)
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