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a. Consider a 15-year treasury bond issued with a face value of BDT 100,000 and an annual coupon interest rate of 7%. What happens to
a. Consider a 15-year treasury bond issued with a face value of BDT 100,000 and an annual coupon interest rate of 7%. What happens to the market value of the bond if the YTM remains at par, goes above or below the coupon interest rate? Briefly explain the market value of the bond in different scenarios with example. b. Absolute Tech Ltd. issued a bond with a face value of BDT 1,000, a coupon rate of 6% per annum, and a maturity period of 15 years. The bond pays coupon interest semiannually. The current market interest rate for bonds with similar characteristics is 5%. i. What is the market value of Absolute Tech's bond? Based on your calculation, is it a premium or discount bond? Why? (2.5) ii. Considering the market value calculated in (i), what would be the YTC of the bond if it is callable after 7 years with a call price of BDT 1080
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