Bonds of Apple Inc. are trading at 994.29. They carry a semi-annual coupon rate of 3.75% and have 27 years left till maturity. Bonds with comparavle risk ade providing a return of 3.9%.

(a) draw the time line representing the bonds

(b) write the formula appropriate for representing these bonds

(c) write the YTM on the above bonds

(c) what is the current yield

(d) what us the capital gains yield

(e) are the above under or overpriced and by how much

(f) explain the jnterpretation of the YTM you got in (c)

(g) what is the interpretation of the capital gains yield you got in (d)

1. On the day I am setting this quiz (11/2/2020). Bonds of Apple Inc. (ticker AAPI) are tending at $994.29. They carry a semi-annual.coupon rate of 3.75%s and have 27 years left till maturity: Bonds with comparable risk are providing a return of 3.9% (m) (+) (27)(2) a. Draw the time line representing the above bonds P 99.29 b. Write the formula appropriate for representing these bonds PV- + L. Cy] + ? c. What is the Yield to Maturity on the above bonds? (show numerical substitution in the formula) c. What is the Current Yield? d. What is the Capital Gains Yield? e. Are the above bonds under or overpriced and by how much? f. Explain the interpretation of the YTM you got in (e). What is the interpretation of the Capital Gains Yield you got in (d)