TYBAF SEM V SUB-FINANCIAL MGMT. & MCOM SEM II SUB-CORPORATE FIN., TOPIC BOND VALUATION PART 3

Описание: TOPIC - BOND VALUATION

TYBAF SEM V

SUB-FINANCIAL MANAGEMENT &
MCOM SEM II

SUB-CORPORATE FINANCE

Introduction of bond valuation part 1-
   • TYBAF SEM V SUB - FINANCIAL MGMT. & MCOM S...  

Basic terms of A bond /important factors in bond valuation

#Face value

#Interest rate / coupon rate

#Maturity period

#Redemption value or maturity value

#Market value

Illustration 3.

A PSU firm wants to issue bonds on variable coupon rate. Other terms of issue are as follows:

Face Value: ₹100 per bond

Life: 8 years

Coupon rate p.a.

1-2 years: 6%

3-4 years: 8%

5-8 years: 9%

The firm plans to issue bonds at a price so that the investors earn a return of 10% p.a.

You are required to advise the firm on the issue price if bonds mature at a premium of 5%.

What is the value of this bond?

this video helping students understand the concepts in bond and how to calculate the value of bond by using table method!