Calculate both bonds current yield and both bonds rate of, Financial Management

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Calculate both bonds current yield and both bonds rate of

Lucia just bought two coupon bonds, one with a face value of $1,000 and the other with a face value of $5,000. Both bonds have a coupon rate of 5% and sold at par today. Calculate both bonds’ current yield and both bonds’ rate of return if Lucia is able to sell these bonds one year later for $100 more than the buying price. Can you estimate what happened to the inter- est rate over that year?

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