Meade Corporation bonds mature in 9 years and have a yield to maturity of 14 percent.

The par value of the bonds is $1,000. The bonds have a 8.5 percent coupon rate and pay

interest on a semiannual basis. What are the current yield and capital gains yield on the

bonds for this year? (Assume that interest rates do not change over the course of the

year.

a. CY = 11.75%; CGY = 2.25%

b. CY = 12.00%; CGY = 2.00%

c. CY = 11.50%; CGY = 2.50%

d. CY = 11.25%; CGY = 2.75%

e. CY = 11.00%; CGY = 3.00%