MGT411 Assignment Solution 2022

 

                          MGT411 Assignment Solution 2022

Suppose you have a coupon bond issued by a corporation of face value Rs. 1,000. The bond has 5 years to maturity and makes annual coupon payments with 6% annual coupon rate. Currently the bond is selling at par as the yield to maturity (YTM) of the bond is same as the coupon rate i.e. 6%. Requirements: 

1. By keeping years to maturity and coupon rate same; you are required to calculate current price of bond and current yield for following cases; a) If YTM of the bond increases to 8% b) If YTM of the bond decreases to 4% 

2. Considering the result of 1st requirement; you are required to explain the relationship between face value of bond, current bond price, coupon rate, current yield and yield to maturity for discount bonds, premium bonds and the bonds selling at par? 

3. Briefly explain that how bond issuers can determine the appropriate coupon rate for their bonds? Note: I

 

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