Meade corporation bonds mature in 6 years and have a yield, Ask an Expert

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Meade Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The par value of the bonds is $1,000. The bonds have a 10 percent coupon rate and pay interest on a semiannual basis. What are the current yield and capital gains yield on the bonds for this year? (Assume that interest rates do not change over the course of the year). (PLEASE SHOW THE PROCESS)

a. Current yield = 8.50%, capital gains yield = 1.50%

b. Current yield = 9.35%, capital gains yield = 0.65%

c. Current yield = 9.35%, capital gains yield = -0.85%

d. Current yield = 10.00%, capital gains yield = 0.00%

e. None of the answers above is correct.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92081555

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