.1 Question 1 (20 marks) answered out of 100 question a) A public-listed software company in Malaysia Workstation and has 6,4% coupon bonds on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for RM943 of par. The par value of the bond is RM1,000 Calculate the current yield on the bonds (2 marks) 10) Estimate the bond's yield to maturity (6 marks) iii) Calculate Workstation Bhd bond's effective annual yield (2 marks) 1) b) Junid Corp issued a bond that has a face value of RM1.000 which matures in 10 years from now. The bond pays 0.25% interest compounded annually. Estimate the current price of Junid Corps bond if investors require a 10.8% return from this bond (5 marks) c) The Edge Market published an article titled "Fixed Income Invest selectively in bonds amid interest rate uncertainty on August 20, 2020, in their personal Wealth column to inform the public about their outlook on bond investments through the Covid-19 pandemic The article also stated the downgrade in the credit rating of Malayan Banking Bhd (Maybank) by Fitch Ratings to BBB+ from A-in April 2020 with this situation, the head of fixed income portfolio fund manager, Daniel Brown pointed out that the impact would be sigrincant not only for the banks but to the entire country's economic position 1) With this insight, explain why do companies volunteer to rate their bonds in the first place? (3 marks) 2.16 PM . ENG X = 18357178 cmid=1963831 Question 1 (20 manns) tot yet answered farked out of 100 P Flex question a) A public-listed software company in Malaysia, Workstation Bhd. has 6.4% coupon bands on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for RM943 of par. The par value of the bond is RM1,000 1) Calculate the current yield on the bonds. (2 marks) ti) Estimate the bond's yield to maturity (6 marks) iii) Calculate Workstation Bhd. bond's effective annual yield. (2 marks) b) Junid Corp. issued a bond that has a face value of RMLOOO which matures in 10 years from now. The bond pays 8 25% interest compounded annually. Estimate the current price of Junid Corp's bond if investors require a 10.3% return from this bond. (5 marks) c) The Edge Market published an article titled "Fixed Income Invest selectively in bonds amid interest rate uncertainty on August 28, 2020, in their 'Personal Wealth column to inform the public about their outlook on bond investments through the Covid-19 pandemic The article also stated the downgrade in the credit rating of Malayan Banking Bhd (Maybank) by Fitch Ratings to BBB+ from A-in April 2020 with this situation, the head of fixed income portfolio fund manager, Daniel Brown pointed out that the impact would be significant not only for the banks but to the entire country's economic position 1) with this insight explain why do companies volunteer to rate their bonds in the first place? 3 marks ii) Should interest rate uncertainty continue through the year till the end of December 2021 how would this perception affect investor's required rate of returns and bond prices? Explain. (2 marks 2511
