What is the expected capital gains yield

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Bond P is a premium bond that carries a 10% coupon rate. A separate bond-Bond D is a discount bond and has a 4% coupon rate. Each of these bonds makes an annual payment (not semi annual) and has a 7% YTM with 10 full years until they mature. Assume that market interest rates do not change, what is the expected capital gains yield over the next year for both Bond P and Bond D.

Reference no: EM13870682

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