Bond P is a premium bond with a coupon rate of 8.5 percent. Bond D is a discount bond with a coupon rate of 5.5 percent. Both bonds make annual payments, have a YTM of 7 percent, and have five years to maturity.
Requirement 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).)
Requirement 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).)
Requirement 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).)
Requirement 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).)