Deadly corp ltd issued 9 5 year bonds of rs 1000- each, Ask an Expert

Finance

Deadly corp Ltd. issued 9%, 5 year bonds of Rs 1,000/- each having a maturity of 3 years. The present rate of interest is 12% for one year tenure. It is expected that Forward rate of interest for one year tenure is going to fall by 75 basis points and further by 50 basis points for every next year in further for the same tenure. This bond has a beta value of 1.02 and is more popular in the market due to less credit risk.

Calculate

i) Intrinsic value of bond

ii) Expected price of bond in the market

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92414547

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