The following table shows the information of the two bonds A and B each offering a...

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The following table shows the information of the two bonds A and B each offering a par value is £100, on 31st May 2020. A B Annual Coupon Rate (96) 5 8 Annual Yield Maturity (%) 4 6 to Expiry Date 31st May 2025 31st May 2028 Wong Pic has also recently issued 10 per cent convertible bonds which will be redeemed in four years' time. The convertible bond offers 11% yield to maturity. The market price of the company shares is £4.85 today with a predicted annual growth rate of 4.5%. The bond can be converted in four years' time into 20 ordinary shares or redeemed at par on the same date. Required: 1.Calculate the price of the bond A and B. 2.How much would the investor be prepared to pay for convertible bonds? The following table shows the information of the two bonds A and B each offering a par value is £100, on 31st May 2020. A B Annual Coupon Rate (96) 5 8 Annual Yield Maturity (%) 4 6 to Expiry Date 31st May 2025 31st May 2028 Wong Pic has also recently issued 10 per cent convertible bonds which will be redeemed in four years' time. The convertible bond offers 11% yield to maturity. The market price of the company shares is £4.85 today with a predicted annual growth rate of 4.5%. The bond can be converted in four years' time into 20 ordinary shares or redeemed at par on the same date. Required: 1.Calculate the price of the bond A and B. 2.How much would the investor be prepared to pay for convertible bonds?

Answer rating: 100% (QA)

1 Calculation of bond prices a Bond A Annual Coupon Rate 5 Annual Maturity 4 Yield to Expiry Date 8 ... View the full answer