Bond P is a premium bond with a coupon rate of 8.8 percent. Bond D is a discount bond with a coupon rate of 4.8 percent. Both bonds make annual payments, have a YTM of 6.8 percent, and have thirteen 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).)
Current yield %
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).)
Current yield %
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).)
Capital gains yield %
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).)
Capital gains yield %
Bond P is a premium bond with a coupon rate of 8.8 percent. Bond D is a discount bond with a coupon rate of 4.8 percent. Both bonds make annual payments, have a YTM of 6.8 percent, and have thirteen 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).) |
| Current yield | % |
| 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).) |
| Current yield | % |
| 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).) |
| Capital gains yield | % |
| 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).) |
| Capital gains yield | % |
Related questions
Suppose the following bond quote for IOU Corporation appears in the financial page of todayâs newspaper. Assume the bond has a face value of $1,000, and the current date is April 15, 2013.
| Company (Ticker) | Coupon | Maturity | Last Price | Last Yield | EST Vol (000s) |
| IOU (IOU) | 9.75 | Apr 15, 2027 | 86.352 | ?? | 1,827 |
| Requirement 1: |
| What is the yield to maturity of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Yield to maturity | % |
| Requirement 2: |
| What is the current yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Martin Software has 8.8 percent coupon bonds on the market with 19 years to maturity. The bonds make semiannual payments and currently sell for 107.2 percent of par. |
| What is the current yield on the bonds? (Round your answer to 2 decimal places. (e.g., 32.16)) |
| Current yield | % |
| What is the YTM? (Round your answer to 2 decimal places. (e.g., 32.16)) |
| YTM | % |
| What is the effective annual yield? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| Effective annual yield | % |
