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What are the expected capital gains yield

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Reference no: EM13213882

Components of Bond returns. Bond P is a premium bond with a 10 percent coupon. Bond D is a 4 percent coupon bond currently selling at a discount. Both bonds make annual payments, have YTM of 7 percent, and have 8 years to maturity. What is the current yield for bond P? For bond D? If interest rates remain unchanged, what are the expected capital gains yield over the next year for bond P? For bond D? Explain your answers and their interrelationships among the various types of yields.

Reference no: EM13213882

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