CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have a 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $910.40. The capital gains yield last year was -8.96%. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % b. For the coming year, what is the expected current yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. % For the coming year, what is the expected capital gains yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. %
CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have a 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $910.40. The capital gains yield last year was -8.96%. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % b. For the coming year, what is the expected current yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. % For the coming year, what is the expected capital gains yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY
Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have a 8% annual
coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in
interest rates, the bond's market price has fallen to $910.40. The capital gains yield last year was
-8.96%.
a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two
decimal places.
%
b. For the coming year, what is the expected current yield? (Hint: Refer to footnote 7 for the definition
of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to
two decimal places.
%
For the coming year, what is the expected capital gains yield? (Hint: Refer to footnote 7 for the
definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your
answer to two decimal places.
%
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