Reference no: EM132648541
1. A bond with face value of Rs. 100 provides with 12% coupon rate and pays Rs. 105 at the time of maturity, which is 10 years from now. If the investor's required rate of return is 13%, at what price should the company issue the bond?
2. On the recommendation of his friend, Deendayal is currently appraising the Martjio`s debenture (face value Rs. 1000) that was issued at face value 3 years ago. Other features of this debenture at the time of issue were annual coupon rate 9%, and maturity after 10 years at 6% premium. Martjio`s debenture is currently trading at Rs. 1030 in the market. His friend has already bought the debenture at the time of issue and Deendayal also finds the investment in this debenture attractive so decides to buy it from the market now. Ignore the tax. Calculate the following:
(a) What was the YTM (Yield to Maturity) at the time of issue?
(b) From the Deendayal`s perspective what would be the YTM, if he purchases the debenture now?
3. Shyam borrows Rs. 1,00,000 for a car at a monthly interest of 2 percent. The loan is to be paid in 9 equal monthly instalments, payable at the end of each month.
a. Prepare the loan amortization schedule.
b. If you deposit Rs. 8,000 today at 8 percent rate of interest in how many years (roughly) will this amount grow to Rs. 5,12,000? Use Rule of 72
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