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You hold two bonds. You own a $1,000 face value bond from Company B that has 5.6% coupons paid once per year, and eleven years
You hold two bonds. You own a $1,000 face value bond from Company B that has 5.6% coupons paid once per year, and eleven years to maturity. The other is a $1,000 face value bond from A Corporation that has 9.6% coupons paid once per year, and eleven years to maturity. The market (YTM) for both bonds is 7.6%. a. What is the current yield for Bond A? For Bond B? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 12.34.) b. If the YTM remains unchanged, What is the expected Capital Gains Yield over the next year for Bond A? For Bond B? (Hint: you will need to solve the price of each bond next year to find the capital gains yield
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