Bond P is a premium bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon rate of 5 percent. Both bonds make annual payments, have a YTM of 7 percent, and have five years to maturity.
1. What is the current yield for bond P? (Do not round intermediate calculations. Round your answer to 2 decimal places (e. g., 32.16).)
Current yield: %
2. What is the current yield for bond D? (Do not round intermediate calculations. Round your answer to 2 decimal places (e. g., 32.16).)
Current yield: %
3. If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond P? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e. g., 32.16).)
Current yield: %
4. If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond D? (Do not round intermediate calculations. Round your answer to 2 decimal places (e. g., 32.16).)Current yield: %
Answers: 2
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Bond P is a premium bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon ra...
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