4 Bond A is a premium bond with a 9 percent coupon Bond B is a 5 percent coupon bond currently selling at a discount Both bonds make annual payments, have a YTM of 6 percent, and have five years to maturity The face value is $1000 for both bonds a What is the current yield for Bond A For Bond B b If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond A For Bond B c Why is the capital gain yield of the premium bond different from that of the discount bond Which bond is better in terms of yields d What is the holding period return for each bond, if both bonds are held over the next year and sold at the year ned

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4  Bond A is a premium bond with a 9 percent coupon  Bond B is a 5 percent coupon bond currently selling at a discount  Both bonds make annual payments, have a YTM of 6 percent, and have five years to maturity  The face value is $1000 for both bonds  a  What is the current yield for Bond A  For Bond B  b  If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond A  For Bond B  c  Why is the capital gain yield of the premium bond different from that of the discount bond  Which bond is better in terms of yields  d  What is the holding period return for each bond, if both bonds are held over the next year and sold at the year ned

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Question: 4. Bond A is a premium bond with a 9 percent coupon. Bond B is a 5 percent coupon bond currently selling at a discount.

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