The answer is current yield = 0.0789 and capital gains yield = - 0.0089.
Given,
Bond P is a premium bond with a 9 percent coupon rate.
It makes annual payments and has a YTM of 7 percent.
The bond has 10 years to maturity.
The annual income (interest or dividends) from an investment is divided by the security's current market value to determine its current yield.
Instead of focusing on a bond's face value, this measure looks at its current price.
A capital gains yield is the increase in an investment's value, such as a stock or bond, and is determined by dividing the increase in value by the value of the security at purchase.
Hence, current yield = 0.0789 and capital gains yield = - 0.0089.
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