Question: You hold two bonds. You own a $ 1 , 0 0 0 face value bond from Company B that has 5 . 8 %

You hold two bonds. You own a $1,000 face value bond from Company B that has 5.8% coupons paid once per year, and
thirteen years to maturity. The other is a $1,000 face value bond from A Corporation that has 9.8% coupons paid once per
year, and thirteen years to maturity.
The market (YTM) for both bonds is 7.8%.
a. What is the current yield for Bond A? For Bond B?
(Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,12.34.)
b. If the YTM remains unchanged, what is the expected capital gains yield over the next year for Bond A? For Bond B?
(Hint: you will need to solve the price of each bond next year to find the capital gains yield.
(A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers
as a percent rounded to 2 decimal places, e.g.,32.16.)
 You hold two bonds. You own a $1,000 face value bond

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