Bond p is a premium bond with an 99 percent coupon bond d


Bond P is a premium bond with an 9.9 percent coupon. Bond D is a 5.9 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 7.9 percent, and have fourteen years to maturity.

a) What is the current yield for bond P?

b) If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond P?

 

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Finance Basics: Bond p is a premium bond with an 99 percent coupon bond d
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