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Chapter 12 Financial Planning Exercise 15 Calculating current yield and return on investment Assume that an investor pays $750 for a long-term bond that carries an 8.5% coupon, During the next 12 months, interest rates drop sharply, and the investor sells the bond at a price of $975.00. Assume that bond's par value is $1,000 and use annual compounding of interest. a. Find the current yield that existed on this bond at the beginning of the year. Round the answer to two decimal places. What was it by the end of the 1-year holding period? Round the answer to two decimal places. % b. Compute the return on this investment using the approximate yield formula and a 1-year investment period. Do not round intermediate calculations. Round the answer to two decimal places. %