Question: Please show formulas . Bond D is a discount bond with an 8 percent coupon. The bond makes annual interest payments, has a YTM of
Please show formulas
. Bond D is a discount bond with an 8 percent coupon. The bond makes annual interest payments, has a YTM of 10 percent, and has 10 years to maturity. a. What is the current yield for Bond D? b. Based on the bond's YTM and your answer for (a), what is the expected capital c. Calculate the bond price one year from now assuming that the interest rate 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 discount bond's gains yield (CGY) over the next year for Bond D if interest rates remain unchanged? remains unchanged at 10%, and use the price you obtain one year fromn 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 as the bond heads for maturity
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