QUESTION $7$

SINA Berhad is interested to invest in Bond AA$.$ Bond AA pays $10\%$ coupon annually and mature in $5$

years. Determine:

i$)$ The value of the bond if current market yield is $8\%.$

ii$)$ Assuming that Bond AA is currently selling at RM$950,$ justify reasons for decision.

QUESTION $8$

The current market price of XYZ is RM$975.$ The coupon of RM$60$ is paid annually. The bond has par

value of RM$1,000.$ If the bond has $6$ years to mature and current interest rate is $12\%,$ would you buy

the bond? Why?

QUESTION $9$

A broker approaches Sally to buy two bonds, Bond S and Bond J$.$ Bond S has $5\%,10$ years bond and

yield at $7\%.$ While Bond J has $10\%,20$ years bond and yield at $9\%.$ Calculate the price of both bonds.

QUESTION $10$

An $8\%,20-$year bond issued $3$ years is currently selling for RM$1,250.$ Determine:

i$)$ The bond's current yield to maturity $($YTM$)$

ii$)$ If your required rate of return is $5\%,$ will you invest in this bond? Why?