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Prem is considering the purchase of a bond currently selling at Rs.878.50.The bond has four years to maturity, with a face value of Rs.1,000 and 8 percent coupon rate. The next annual interest payment is due after one year. The required rate of return is 10 per cent.a. Calculate the intrinsic value(present value) of the bond. Should Prem buy the bond?Calculate the yield to maturity of the bond. |
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