FBM Ltd issued a bond with a par value of RM1,000, a coupon rate of 8%, and a yield to maturity of 7%. After three years the market price of the bond had decreased by 5%.

Required:
(i) What is the value of the bond after three years? (7 marks)
(ii) What is the bond current yield in year three? (5 marks)
(iii) What should be the most logical action to be taken by the investor of the bond? (3 marks)n

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TRUE/FALSE V. VI. VII. VIII. dollar. The essence of the time value of money is that a future dollar is worth less than a present Considering the time value of money, and assuming a constant annual revenue from an equipment, it would be wiser to write off small depreciation amounts in the early years and larger amounts in the later years. When interest rate is zero, the future value of a project will be equal to its present value. The following cash flow pattern can be represented via a gradient series. 2 TRUE/FALSE V. VI. VII. VIII. dollar. The essence of the time value of money is that a future dollar is worth less than a present Considering the time value of money, and assuming a constant annual revenue from an equipment, it would be wiser to write off small depreciation amounts in the early years and larger amounts in the later years. When interest rate is zero, the future value of a project will be equal to its present value. The following cash flow pattern can be represented via a gradient series. 2

Answer rating: 100% (QA)

Answer i Value of the bond after three years The total payment upon maturity is RM100... View the full answer