Question: QUESTION 2 (20 MARKS) (a) Define and briefly explain the following: i. Convertible bond ii. Callable bond (2.5 marks each) (b) A RM1,000 coupon bond

QUESTION 2 (20 MARKS)

(a) Define and briefly explain the following:

i. Convertible bond

ii. Callable bond

(2.5 marks each)

(b) A RM1,000 coupon bond mature in 10 years has a coupon rate of 8 percent. Calculate the price of this bond, using the following market rate of interest of:

i. 6 percent.

(3 marks)

ii. 8 percent.

(3 marks)

iii. 12 percent.

(3 marks)

(d) In (a) ii, calculate the price of the bond if the interest is paid-quarterly.

(3 marks)

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