QUESTION

a) Astra Group has an issue of RM1,000 par value bonds with a 14 percent annual coupon interest rate. The issue has ten years remaining to the maturity date. Bonds of similar risks are currently selling to yield a 12 percent rate of return. What is the current value of each Astra bond?

b) Information relating to bond L, M and N are as follows: - Annual Coupon Years to Required Bond Par Value ($) Interest Rate (%) Maturity Return (%) L 1000 9 5 6 M 100 10 8 10 N 500 18 17 15