Expected reinvestment rate

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a. A bond with 5 years to maturity and coupon payment is 13 percent, market price is Tk. 1075, and par value is Tk. 1000 and expected reinvestment rate of 10 percent. Calculate:

-Interest on Interest

-Total Return

-The realized compound yields for the bond and justify your findings based on reinvestment risk.

b. Demonstrate security market line (SML) to depict the undervalued and overvalued stocks from your own portfolio and justify investment decision that already taken by you.

c. Briefly explain its implications of (P/E) ratio, AZIZPIPES current P/E ratio 128.38, DESHBANDHU P/E 104.67, which stock would you prefer to invest and why?

Reference no: EM132538900

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