Sanofi Limited is considering three bonds for investment, A: Rs 1,000, B: Rs 1,000 and C: Rs 1, 00. Coupon (interest rate) payable annually bonds are, A: 12 percent, B: 13 and C: 14. The Years to maturity for the bonds are:

A: 5, B: 6, C: 7 and the redemption value for Bonds A: 1,000, B: 1,000 and C: 100. The current market price for bonds: A: Rs.900, B: Rs.850, C: 92.

1. What are the (a) yields to maturity (use the approximate formula) (b) durations, and (c) volatilities of these bonds that Sanofi is planning to invest?

(10 Marks)

2. Advice Sanofi Limited in which bonds they should invest? Give reason to your answer. (3 marks)