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Calculate the value to this bond

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Reference no: EM132986841

Question -

(a) Serina has been hired as financial analyst and assign to evaluate a new 20-year callable convertible bond. The information of the bond are as follows:

-6.8 percent coupon rate, payable annually.

-The conversion price is RM160.

-The share currently sells for RM42.20

-The share price expected to grow at 12 percent.

-The bond is callable at RM2,150, but based on an experience before, it won't be called unless the conversion value is RM2,250.

-The required return on this bond is 10 percent. Calculate the value to this bond.

(b) Short-term securities are investments which usually recorded in equity and debt securities that are expected to be sold and converted to cash within one year or within the company's operating cycle. These funds are included in a company's current assets, usually right after the disclosure of the cash. Briefly explain the characteristics of these short-term securities.

Reference no: EM132986841

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