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Calculate the intrinsic value of bond

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Reference no: EM132854289

Question - ABC Ltd issued bonds having a maturity. The present interest rate is 12% for one year tenure. It is expected that forward rate of interest for one year tenure is going to fall by 75 basis points and further by 50 basis points for very next year in further for the same tenure. This bond has a beta value of 1.02 and is more popular in the market dues to less credit risk.

(a) Calculate the intrinsic value of bond?

(b) Calculate the expected price of bond in the market?

Reference no: EM132854289

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