Meade Corporation Bonds Mature in 6 Years and Have a Yield

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) .

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.