Metsan A..'s outstanding bonds have a 15-year maturity and 1.000TL par value. Their nominal yield to maturity is 18,5%, they pay interest semiannually, and they sell at a price of 1,075.38TL.

a. What is the bond's nominal (annual) coupon interest rate?

b. What are the expected current and capital gains yields on the bond for the next year?

c. Will the realized rates of return be the same as the ones you found in part b if market interest rates increase? Explain.