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If a bond's yield to maturity does not change, the return on the bond each year will be equal to the yield to maturity. Confirm this for both a premium and a discount bond using a 4-year 4.4 percent coupon bond with annual coupon payments and a face value of $1,000.

a. Assume the yield to maturity is 3.4 percent.

What is the current value of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Bond price today $

What will the bond value be in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Bond price in one year $

What is the rate of return for the first year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

Rate of return %

b. Assume the yield to maturity is 5.4 percent.

What is the current value of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Bond price today $

What will the bond value be in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Bond price in one year $

What is the rate of return for the first year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

Rate of return %

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