Question
Pretika Holdings Berhad is a property developer company in Malaysia, due to high demand of property, the company has decided to build up a new
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Pretika Holdings Berhad is a property developer company in Malaysia, due to high demand of property, the company has decided to build up a new township which located at Bangi. The projects estimated cost is RM750 million and they were planning to finance using debt which by issuing bond. The bond has a par value RM1,000 with 10 percent coupon rate and will mature in 10 years. Dr. Keertan is a retail investor and he has decided to buy the bond.
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Calculate the value of bond (Vb) if the required rate of return is 8 percent.
(5 marks)
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Determine the new value of bond (Vb) if the market rate has increased to 12 percent.
(5 marks)
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Define Yield to Maturity (YTM) in bond investment.
(3 marks)
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Finance At The Threshold
Authors: Christopher Houghton Budd
1st Edition
0566092115, 978-0566092114
