You are a debt investor and have purchased a bond (held to maturity, BDT 3,000,000, semi-

annual 5 years bond with a coupon rate of 11%) on the bond issuing date, i.e., January 5, 2019.

Note that, the interest rate has been dropped to 9% and the deposit interest rate to 6% from

April 1, 2020. COVID 19 hit Bangladesh on March 8, 2020, and the situation is likely to be

tougher in the future. Bangladesh Bank and Government have modified some policies to

boost up the business and economy.

You have the flexibility to convert the bond into 200,000 common shares at a PAR BDT

10/share. The tax rate is 35%. Considering the ongoing issue and the upcoming

economic/pandemic factor, explain your best investment strategy as a held to maturity

bondholder. Should you hold the bond till the end of maturity or convert them into

common shares in 2020 or sell the bond and invest your money into another sector (you need

to mention the name of the sector) to ensure a maximum return in the future? Properly

explain with relevant data/calculation about your investment strategy during.

Some information about the bond issuing company (Pre COVID 19):

Number of Common Shares= 10,500,000 Shares

Par Values = BDT 10/share

IPO value = BDT 12/share

Fair value of share (pre COVID 19) = BDT 16/share

Total Asset = BDT 60 cr (40% is current and the rest is noncurrent; 25% of current asset is

cash)

Total Liability = BDT 40 cr (70% is current and 30% is long term)

Total equity = BDT 20 cr (Equity has only three items: Paid up capital, Additional paid up

capital and Retained earnings)