Problem 7-32 Components of Bond Returns [LO2] Bond P is a premium bond with a coupon rate of 12 percent. Bond D has a coupon rate of 7 percent and is currently selling at a discount. Both bonds make...



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Problem 7-32 Components of Bond Returns [LO2]<br>Bond P is a premium bond with a coupon rate of 12 percent. Bond D has a coupon rate<br>of 7 percent and is currently selling at a discount. Both bonds make annual payments,<br>have a YTM of 9 percent, and have five years to maturity.<br>a. What is the current yield for Bond P and Bond D? (Do not round intermediate<br>calculations and enter your answers as a percent rounded to 2 decimal places,<br>e.g., 32.16.)<br>b. If interest rates remain unchanged, what is the expected capital gains yield over the<br>next year for Bond P and Bond D? (A negative answer should be indicated by a<br>minus sign. Do not round intermediate calculations and enter your answers as a<br>percent rounded to 2 decimal places, e.g., 32.16.)<br>а.<br>Bond P current yield<br>%<br>Bond D current yield<br>b. Bond P capital gains yield<br>%<br>Bond D capital gains yield<br>%<br>

Extracted text: Problem 7-32 Components of Bond Returns [LO2] Bond P is a premium bond with a coupon rate of 12 percent. Bond D has a coupon rate of 7 percent and is currently selling at a discount. Both bonds make annual payments, have a YTM of 9 percent, and have five years to maturity. a. What is the current yield for Bond P and Bond D? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P and Bond D? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) а. Bond P current yield % Bond D current yield b. Bond P capital gains yield % Bond D capital gains yield %

Jun 02, 2022
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