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a) Syarikat U-Untung, issues bonds for a ten year period with a par value of RM1,000 and pays a coupon rate of 9%. Assume

 

a) Syarikat U-Untung, issues bonds for a ten year period with a par value of RM1,000 and pays a coupon rate of 9%. Assume that the bond has 4 years to maturity and is currently selling at RM970. Compute the yield to maturity for this bond. (5 marks) b) A bond has a yield to maturity of 9 percent, a 7.5 percent annual coupon, a RM1,000 face value, and a maturity date 21 years from today. What is the current yield? (5 marks) c) Ordinary shares of Terlaris Company that are sold at the price of RM1.80 had just paid dividends for RM0.25 and the dividends are expected to grow by 5% a year at a constant rate. The expected rate of return is 14%. What is the value of the share? Should we accept the investment? (5 marks)

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