Q.1:You are thinking to invest buy purchasing bond from the IPO market. Suppose Max Company offers you a bond that has 10 % annual coupon payable semiannually and a face values of tk. 1000. There are 10 years to maturity.

Requirement:

a)What would be the price of bond if its yield to maturity is (a) 11% (b) 10% and (c) 8%

b)Comment on the result

Q.2:

a) An investor deposits tk. 10,000 in a bank account for 7 years at 12 percent interest. Find out the amount which he will have in his account if interest is compounded (i) annually (ii) semiannually (iii) quarterly.

b) Mr. Pandey is planning to retire this year. His company offers him two alternative. He can receive tk. 20, 00,000 today or tk. 2, 00,000 life time annuity. Mr. Pandey is in good health and expected to live at least 20 years. If interest rate is 10%, which alternative should he choose?