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 $ face value bond from Company B that has coupons paid once per year, and
thirteen years to maturity. The other is a $ face value bond from A Corporation that has coupons paid once per
year, and thirteen years to maturity.
The market YTM for both bonds is
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 decimal places, eg
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 decimal places, eg
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