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Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 7 annual coupen rate and were ispuod 1 year

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Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 7 annual coupen rate and were ispuod 1 year ago at their par. value of st,000. Hawevet due to changes in interest ratns, the bond's market price has fallen to $810.40. The capitel gains yield last year was - 18.96%. a. What is the yield to maturey? Do not round intermediate calculations. Round your acswer to two decmal places. b. For the coming year, what are the expected current and capital gains yields? (Hinti fefer to Foetnate 6 far the definition of the current yieis and to Toble 7.1 ) Do net. tound intermediate calcutations. Hound your answers to two decimal places. Expected current vieid: Expected capital gains yield lim2 c. Win the actual realized yelds be equal to the expected yeids if interest rates change? if not, how will they differ? 1. As rates change they will cause the end-ofyear price to change and this the realad capitol gains yied to change. As a result, the resilied return to inversters will differ from the VTM. 11. As bong as promised coupon payments are made, the currem yield will change as a result of changing hterast rates hosever, changing fates will couse the prike to change and as a resulit, the realued return to inwestors will differ from the rm. IIt. As long as promised coupon payments are made, the current yieid will not change as a result of changhg interea rates. However changing rates wil couse the price to change and as a result, the realized return to investorn should equal the VTM. IV. 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 shauld equal the YTM. V. As long as promised coupon payments ace made, the current yield will change as a result of changing interest rates. Hoeever, changing r ates will not casse the price to change and as a result, the realized return to investors should equal the YTM

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