Questions Problem 7.10 (Current Yield, Capital Gains Yield and Yield te Maturity) Assignments. Submit Agent for Grading SVE 12. 13 Question 14 of 20 14. Check My Work 3 remaining) E 15 eBook Problem Walk-Through Pelzer Printing Inc. has bonds outstanding with 19 years letto maturity. The bonds have a 7% annual coupon rate and were issued 1 year ago at their per value of $1,000. However, due to changes o in interest rates, the band's market price has fallen to $8.20. The capital gains yield last year was-10.98% a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places 16. 17. 0 0 0 0 0 0 18 19. 20 b. For the coming year, what are the expected current and capital gains yields? Hint: Refer to Footnotes for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answers to two decimal places. Expected current yield % Expected capital gains yield: c. Will the actual realized yields be equal to the expected yields i interest rates change? If not, how will they differ? 1. 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 to investors will differ from 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 cause the price to change and as a result, the realized return to investors will differ from the YTM. III. 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. 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 as a result, the realized return to investors should equal the YTM V. As long as promised coupon payments are made, the current yield will change as a result of changing interest rates. However, changing rates not cause the price to change and as a result, the realized return to investors should equal the YTM -Select- Check My Work (gremaining) Olon Key Problem 7.10 (Current Yield, Capital Gains Yield, and Yield to Maturity) Question of 20 Submit Assignment for Grading Save