Problem 7-10 Current yield, capital gains yield, and yield to maturity Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have an 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to $905.35. The capital gains yield last year was -9.465%. changes in interest rates, the bond's market price has fallen a. What is the yield to maturity? Round your answer to two decimal places. b. For the coming year, what the expected current yield? (Hint: Refer to footnote 7 for the definition f the current yield and to Table 7.1.) Round your answer to two decimal places. % the expected capital gains yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Round your answer to two decimal places. For the coming year, what % c. Will the actual realized yields be equal to the expected yields if interest rates change? If not, how will they differ? I. As long as promised coupon payments are made, the current yield will change as a result of changing interest rates. However, changing rates will cause the price to change and as a result, the realized return to investors should equal the YTM. II. As long as promised coupon payments are made, the current yield will change as a result of changing interest rates. However, changing rates will not cause the price to change and as a result, the realized return to investors should equal the YTM. investors will differ from the YTM. III. As rates change they will cause the end-of-year price to change and thus the realized capital gains yield to change. As a result, the realized return IV. As long as promised coupon payments are made, the current yield will change as a result of changing interest rates. However, changing rates will cause the price to change and a result, the realized return to investors will differ from the YTM. V. As long as promised coupon payments are made, the current yield will not change as a result of changing interest rates. However, changing rates will cause the price to change and as a result, the realized return to investors should equal the YTM. -Select- IV Check My Work (1 remaining)