Determine the worth of the bond

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Question a) On 1 January 2017 Inferno Bhd issued a bond with 15 years to maturity. Inferno Bhd‘s bond has an annual coupon of RM3.240 and a face value of RM40,500 paid at maturity in 15 years. Similar bonds have a yield to maturity of 8 percent. What would this bond sail for?

Question b) Supposed that in 2018 the interest rate has risen from 8 percent to 10 percent. Inferno Bhd's bond has nine years left to maturity. Determine the worth of the bond.

Question c) What happens if in 2018. interest rate dropped by 2 percent from 8 percent. lnfemo Bhd's bond still has nine years leit to maturity. Determine the worth of the bond.

Question d) When ?rms need to raise money. issuing bonds or issuing ordinary shares is one way to do it. Explain the impacts of issuing bonds or ordinary shares to investors

Reference no: EM132468604

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