Please show work.......thanks! Fixed Income HW due 6/29/19 Assume today is June 19, 2019 and that all...

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Please show work.......thanks!
Fixed Income HW due 6/29/19
Assume today is June 19, 2019 and that all bonds pay interestannually with a face value of $1,000.
YTM = Current yield + Capital Gains yield; CY = AnnualInterest/Current Price
GE is A rated; AA Treasuries yield 3-year is 1.90%, 10-year2.10%
5 Years ago GE issued 6% coupon paying bonds with a face valueset to mature on June 19, 2029. Growth concerns have forcedmonetary authorities throughout the world to lower interest ratesduring the past several years and as such, the price of these GEbonds has risen to 1175.00
What is yield to maturity for an investor who buys the bondstoday at the current price?
Is the bond trading at a premium, discount or at par? Explainwhat your answer means
What is the capital gains yield of this bond and interpret whatthe sign of the CGY means?

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4.0 Ratings (756 Votes)

Bond is trading ata premium if the current market price of the bond is higher thanits face valuea discount if the See Answer

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Please show work.......thanks!Fixed Income HW due 6/29/19Assume today is June 19, 2019 and that all bonds pay interestannually with a face value of $1,000.YTM = Current yield + Capital Gains yield; CY = AnnualInterest/Current PriceGE is A rated; AA Treasuries yield 3-year is 1.90%, 10-year2.10%5 Years ago GE issued 6% coupon paying bonds with a face valueset to mature on June 19, 2029. Growth concerns have forcedmonetary authorities throughout the world to lower interest ratesduring the past several years and as such, the price of these GEbonds has risen to 1175.00What is yield to maturity for an investor who buys the bondstoday at the current price?Is the bond trading at a premium, discount or at par? Explainwhat your answer meansWhat is the capital gains yield of this bond and interpret whatthe sign of the CGY means?