Q.1

Discuss different types and characteristics of debt instruments with specific reference of Bonds.

Due to covid19 the equity market exhibits down move and hence he considers it a risky investment.down so he considers itis quite risky. Mr. Sikander looking to have stable income. Mr. Sikander is a retired person and just received Amount 40,000,000 on account of different funds. He is looking to buy Bonds. Mr. Saleem a friend of Sikander suggested him to buy MCB bonds. The bond has 25 years' life and was issued 13 years ago. It pays 11.5 percent coupon rate with face value PKR 1050. Mr. Ahmed wants to make 14% profit from his investments.

a.Should Mr. Sikander buy MCB bond if it is currently selling at 930?

b.How many bonds can he buy if the bond is selling at calculated price?

c.Write features of Zero-coupon bond and why do investors buy it when they offer nothing periodically?

Q.2

a) Suppose you save $4,000 per year at the beginning of each year for 10 years and earn

8.5% interest per year. How much will you have at the end of 10 years?

b) You have Rs.25, 000 which you deposited in a bank account, bank promised to pay

you back Rs.75, 000 after 8 years. What rate offered by bank?

c) You borrowed Rs.500, 000 at 18% for five years.

Part a) How much you will pay each year to settle this loan?

Part b) If you decided to settle this loan after two years, what additional amount you will

pay at the end of two years to fully payback this loan while bank is not imposing

any fine on you?