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Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 9% 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 $950.70. The capital gains yield last year was -4.93%.

  1. What is the yield to maturity? Do not round intermediate calculations.


2.For the coming year, what are the expected current and capital gains yields? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations.

Expected current yield:   %

Expected capital gains yield:   %

Top Answer

Hence, the 1). Yield to maturity = 9.80%... View the full answer

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