Question
Problem 7-10 Current yield, capital gains yield, and yield to maturity Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds
Problem 7-10 Current yield, capital gains yield, and yield to maturity
Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 9% 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 $905.35. The capital gains yield last year was -9.465%.
What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. ___ %
For the coming year, what is the expected current yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. ___ % For the coming year, what is the expected capital gains yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. ___ %
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