You do not have enough money to start your business so you approach a bank. The bank offers to lend you Rs 100,000 and you sign a security paper. The bank asks you to issue a security paper in their favor on the following terms required by the bank.

Par Value = Rs 100,000 (ie. Loan Principal Amount)

Maturity = 2 years

Coupon Rate = 15% mark-up paid at end of each year

Require rate of return = 10% pa

Note: This is a simplified case where we are creating a short-term bank loan like a Bond. For the Bank, what is the Value of Investing in security with you?