There are 2 bonds:

A.

9% coupon rate

annual payments

yield to maturity 6.5%

10 yrs till maturity

par value 1,000

B.

4% coupon rate

annual payments

yield to maturity 6.5%

10 yrs till maturity

par value 1,000

1. What are the current yields of the bonds

2. What are the captial gains of each bond for the next yr with same interest rates

3. What will happen to the captial gains yield if interest rates stay the same for next 10 yrs