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Please solve this question of BBA (Business) 1) Pakistan State oil has Rs.1000 par value bonds at 10% annual coupon rate with 5 years to
Please solve this question of BBA (Business)
1) Pakistan State oil has Rs.1000 par value bonds at 10% annual coupon rate with 5 years to maturity (interest rate paid semiannually). Whereas, Attock Petroleum has Rs 1000 par value bond at 10% annual coupon rate with 20 years to maturity. Interest is puid semiannually). Suppose the required rate of return for both bonds fell from 10% to 8%. Required: (8 marks) D) With new lower required rate of return, estimate the bond price for both companies. Which bond price would he more and by how much. ii) By new required rate of return which bond will show more fluctuation in prices and whyStep by Step Solution
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