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You hold two bonds. You own a $1,000 face value bond from Company B that has 5.8% coupons paid once per year, and thirteen years

You hold two bonds. You own a $1,000 face value bond from Company B that has 5.8% coupons paid once per year, and thirteen years to maturity. The other is a $1,000 face value bond from A Corporation that has 9.8% coupons paid once per year, and thirteen years to maturity.

The market (YTM) for both bonds is 7.8%.

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.

(A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

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