Question: 3. Bond E is a premium bond with a 10 percent coupon. The bond makes annual interest payments, has a YTM of 8 percent, and

3. Bond E is a premium bond with a 10 percent coupon. The bond makes annual interest payments, has a YTM of 8 percent, and has 8 years to maturity. a. What is the current yield for Bond E? b. Based on the bond's YTM and your answer for (a), what is the expected capital gains yield (CGY) over the next year for Bond E if interest rates remain unchanged? c. Calculate the bond price one year from now assuming that the interest rate remains unchanged at 8%, and use the price you obtain one year from now along with the current price to check your capital gains yield answer in (b). the expected capital gains yield over the year after next year at that price? current yield and capital gains yield if market interest rates remain unchanged d. What is the current yield of the bond in one year at the price in (c)? What is e. Based on your answers to all of the above, what happens to a premium bond's as the bond heads for maturity

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