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Compute the value of bilu bond and delta beta bond

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Reference no: EM133107685

Question - Juju Corporation buy Bilu bonds for 20 years and has been issued 12 years ago at a coupon rate of 7%, yield to maturity is 7% and the interest is paid annually. Juju also buy Delta bonds for 15 years and has been issued 3 years ago at a coupon rate of 6%, yield to maturity of 10% and the interest is paid semi-annually. Current market price for Juju bond and Delta bonds are RM120 and RM75 respectively. Bilu bond is issues in US Bank in UK and denominated in US dollar.

Juju wants to invest in Cucu bond that is currently is traded in UK and denominated in pound sterling. It was issued by Japan organisation. Its market price is RM1200 and the coupon rate is 6%.

Required -

a. Compute the value of Bilu bond and Delta Beta bond.

b. Compute the YTM for Cucu bond. [Hint: Use interpolation method]

c. Evaluate all the above bonds.

d. Differentiate between Cucu bond and Bilu bond.

Reference no: EM133107685

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