Bond P is a premium bond with a coupon rate of 8.6 percent. Bond D is a discount bond with a coupon rate of 4.6 percent. Both bonds make annual payments, have a YTM of 6.6 percent, and have eleven years to maturity.
Requirement 1: What is the current yield for bond P?
Requirement 2: What is the current yield for bond D?
Requirement 3: If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond P?
Requirement 4: If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond D?