Bond Returns

A 15-year, $1,000 par value bond has an 8.5% annual payment coupon.The bond currently sells for $925.After one year, assuming the the yield to maturity (discount rate) remains the same as previous, calculate the following returns between the two years:

1) Current yield

2) Capital gains yield

3) Total returns

Hint:

• solve the rate (yield to maturity) for the 25-year bond.
• with the same yield to maturity, solve the price for the bond with shorter maturity.
• Show all your work for full credit.

year 0 rate ?? 10% nper 15 14 pmt 85 85 Pv -925 ?? fv 1000 1000 type 0 0 excel rate pv calculation ?? ?? price ?? ??