You have the option to either issue a bond or to purchase the bond in July 1, 2020. The bond

is a held to maturity security, face value is BDT 3,000,000, semi-annual 5 years bond with a

coupon rate 11%. Note that, the market interest rate has been dropped to 9% and deposit

interest rate to 6% from April 1, 2020. COVID 19 hit Bangladesh from 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.

Considering the ongoing issue and the upcoming economic/pandemic factor, explain your

best position for the bond, i.e., should you purchase the bond and become a bond holder

OR should you issue a bond and become a bond issuer. You decision will be based on your

financial benefit from the bond purchase/issue.

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

Total Asset = BDT 50 cr (40% is current and the rest is noncurrent; 25% of current asset is

cash)

Total Liability = BDT 20 cr (60% is current and 40% is long term)

Total equity = BDT 30 cr (Equity has only three items: Paid up capital, Additional paid up

capital and Retained earnings)