03-10-2010, 03:01 PM
Good Day Dear Members,
Q as follows
A investing in the bonds of P Industries.Bonds were issued 5yrs ago @ their N$1000 PV,and have 25yrs remaining until they mature.Their coupon interest rate 8%,are convertible into 50 shares of common stock,can be called any time at N$1080.Inflation,currently @ 5% annually,is likely to increase to a 6% annual rate.
What is the bonds value at a required rate of return of 6%?
And is it selling at a discount,at a premium or at par value?
Many thanks
Q as follows
A investing in the bonds of P Industries.Bonds were issued 5yrs ago @ their N$1000 PV,and have 25yrs remaining until they mature.Their coupon interest rate 8%,are convertible into 50 shares of common stock,can be called any time at N$1080.Inflation,currently @ 5% annually,is likely to increase to a 6% annual rate.
What is the bonds value at a required rate of return of 6%?
And is it selling at a discount,at a premium or at par value?
Many thanks
