Compute the current yield

Reference no: EM131394081

Five years ago Dynamic Systems issued a 15-year bond with a $1,000 par value and a 7 percent coupon rate. Interest is paid semiannually. Today the going interest rate is 10 percent, and it is expected to remain at this level for many years in the future. Compute the

(a) current yield and

(b) capital gains yield that the bond will generate in the fifth year (Year 5) of its life.

Reference no: EM131394081

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