Mrs. Shalini is planning to invest in less-risky financial instruments. For the same, she has multiple...

  

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Mrs. Shalini is planning to invest in less-risky financial instruments. For the same, she has multiple options such as government bonds, treasury bills, commercial papers, post- office savings fund, and others. She has come to a conclusion regarding investment in bonds which has following features: A Rs. 1,000 par value bond, bearing a coupon rate of 15% which will mature after 5 years. (i) Now she wants to know, if the required rate of return on the bond is 16%, what is its value? (4 marks) Also, she has another option available for a different bond investment, the details of which are as follows: A Rs. 100 par value bond, bearing a coupon rate of 14 % payable semi-annually which will mature after 6 years. (ii) She wants to calculate If the required rate of return on the bond is 12% p.a., what is its value? (4 marks) (iii) Keep yourself in shoes of Mrs. Shalini and decide which investment among the two bonds to go for and why? (2 marks) Mrs. Shalini is planning to invest in less-risky financial instruments. For the same, she has multiple options such as government bonds, treasury bills, commercial papers, post- office savings fund, and others. She has come to a conclusion regarding investment in bonds which has following features: A Rs. 1,000 par value bond, bearing a coupon rate of 15% which will mature after 5 years. (i) Now she wants to know, if the required rate of return on the bond is 16%, what is its value? (4 marks) Also, she has another option available for a different bond investment, the details of which are as follows: A Rs. 100 par value bond, bearing a coupon rate of 14 % payable semi-annually which will mature after 6 years. (ii) She wants to calculate If the required rate of return on the bond is 12% p.a., what is its value? (4 marks) (iii) Keep yourself in shoes of Mrs. Shalini and decide which investment among the two bonds to go for and why? (2 marks)