Juju Corporation buy Bilu bonds for 20 years and has been issued 12 years ago at a coupon rate of 7%, yield to maturity is 7% and the interest is paid annually. Juju also buy Delta bonds for 15 years and has been issued 3 years ago at a coupon rate of 6%, yield to maturity of 10% and the interest is paid semi-annually. Current market price for Juju bond and Delta bonds are RM120 and RM75 respectively. Bilu bond is issues in US Bank in UK and denominated in US dollar. Juju wants to invest in Cucu bond that is currently is traded in UK and denominated in pound sterling. It was issued by Japan organisation. Its market price is RM1200 and the coupon rate is 6%. Required: a. Compute the value of Bilu bond and Delta Beta bond. b. Compute the YTM for Cucu bond. [Hint: Use interpolation method]

Juju Corporation buy Bilu bonds for 20 years and has been issued 12 years ago at a coupon rate of 7%, yield to maturity is 7% and the interest is paid annually. Juju also buy Delta bonds for 15 years and has been issued 3 years ago at a coupon rate of 6%, yield to maturity of 10% and the interest is paid semi-annually. Current market price for Juju bond and Delta bonds are RM120 and RM75 respectively. Bilu bond is issues in US Bank in UK and denominated in US dollar. Juju wants to invest in Cucu bond that is currently is traded in UK and denominated in pound sterling. It was issued by Japan organisation. Its market price is RM1200 and the coupon rate is 6%. Required: a. Compute the value of Bilu bond and Delta Beta bond. b. Compute the YTM for Cucu bond. [Hint: Use interpolation method]

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Lloyd's of London is selling a perpetual bond that will provide the bondholder with $100 / year forever. The first payment is one year from now. Assuming an interest rate of 5%, what is the value of this bond? a) $2,000 b) $5,000 c) $2,200 d) $4,400
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