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    Corporate FInance 101 EDX IIMBX Course Practice

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    Dipesh dips
    This document discusses calculating the price of a semi-annual coupon bond. It provides the annual coupon rate, face value, time to maturity, and market interest rate. It shows the present value calculations of the cash flows and face value using the market rate to determine the price of the bond is Rs. 905. It also discusses calculating the yield to maturity of a bond given its price, coupon rate, face value, and time to maturity. Finally, it provides an example of calculating total return of a stock based on its purchase price, dividend, and sale price.

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    Corporate FInance 101 EDX IIMBX Course Practice

    Uploaded by

    Dipesh dips
    28 views2 pages
    This document discusses calculating the price of a semi-annual coupon bond. It provides the annual coupon rate, face value, time to maturity, and market interest rate. It shows the present value calculations of the cash flows and face value using the market rate to determine the price of the bond is Rs. 905. It also discusses calculating the yield to maturity of a bond given its price, coupon rate, face value, and time to maturity. Finally, it provides an example of calculating total return of a stock based on its purchase price, dividend, and sale price.

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    This document discusses calculating the price of a semi-annual coupon bond. It provides the annual coupon rate, face value, time to maturity, and market interest rate. It shows the present value calculations of the cash flows and face value using the market rate to determine the price of the bond is Rs. 905. It also discusses calculating the yield to maturity of a bond given its price, coupon rate, face value, and time to maturity. Finally, it provides an example of calculating total return of a stock based on its purchase price, dividend, and sale price.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    28 views2 pages

    Corporate FInance 101 EDX IIMBX Course Practice

    Uploaded by

    Dipesh dips
    This document discusses calculating the price of a semi-annual coupon bond. It provides the annual coupon rate, face value, time to maturity, and market interest rate. It shows the present value calculations of the cash flows and face value using the market rate to determine the price of the bond is Rs. 905. It also discusses calculating the yield to maturity of a bond given its price, coupon rate, face value, and time to maturity. Finally, it provides an example of calculating total return of a stock based on its purchase price, dividend, and sale price.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 2

    Q2 LEC 3.

    2 Find the price of a semi-annual coupon bond where annual coupon rate is
    ₹ 1.48 8%. The face value is Rs. 1000 and there are 5 years until maturity. The
    ₹ 675.56 annual percentage rate on bonds of comparable risk with semi annual
    compounding is 16%.
    ₹ 5,540.19 PV Cash flows
    ₹ 4,459.81 PV Face Value
    ₹ 10,000.00

    ₹ 324.44 PV Cash flows


    ₹ 675.56 PV Face Value
    ₹ 1,000.00

    ₹ 268.40 PV Cash flows As after the issue of the bond, it's Oportunity Cost or Interest Rate changes
    ₹ 463.19 PV Face Value to 16% Annually i.e. 8% semi-annually. Hence, we needed to discount the
    ₹ 731.60 annuity & face value by 8% instead of earlier 4% to get the Present Value.

    Finally, we sum the PV of annuity & Face value calculated at the market
    opportunity cost or discount rate of 8% to get the Price of the bond.

    Price -905 PV A bond is selling in the market for Rs. 905. The coupon ra
    6.125%, paid annually. The face value of the bond is Rs. 1
    time to maturity is 12 years. What is the Yield to Maturit
    Face Value 1000 FV (HINT: USE EXCEL)
    Coupon Rate 6.125%
    Yearly Payment 61.25
    Semi annual
    PMT
    Payment
    No of Periods 12 nper

    Semi Annual
    RATE fn
    Yield
    Annual Yield 7.34%

    L3.3 Qs/
    Example
    5/X + [(110 - X ) / X] = 0.15
    115 - X = 0.15X
    X = 115 / 1.15 = 100

    rE = Dividend Yield + Capital gains rate Consider an investor who purchases a share at Rs. 500 and receives
    rE = D1/P0 + (P1 - P0)/ P0 dividend of Rs. 15 and sells the share at Rs. 525 one year later. Wha
    rE = 15/500 + (25)/ 500 = 40 / 500 = 8% total return of the stock?
    nnual coupon rate is
    ntil maturity. The
    ith semi annual

    nterest Rate changes


    ded to discount the
    the Present Value.

    ted at the market


    e of the bond.

    or Rs. 905. The coupon rate of the bond is


    value of the bond is Rs. 1000. The remaining
    at is the Yield to Maturity of this bond?

    e at Rs. 500 and receives a


    525 one year later. What is the

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