Financial Markets & Institutions Feb.23
Financial Markets & Institutions Feb.23
Financial Markets & Institutions Feb.23
ln addition to Q1, there would be six questions. Each question would carry l0 Marks.
Students have to attempt any four out of the remaining six Questions and within each
question;
students have to attempt any one out of two sub - questions'
In all, students have to attempt five questions i.e. (Q1 + Any Four of the remaining)
(20 Marks)
Q.l
A) How much would an investor pay to purchase a bond today, which is redeemable in four
years for its nominal value or face value of Rs1000 and pays an annual coupon of Soh on the
nominal value? The required rate of return (or YTM) for a bond in this risk class is 4o/o.
B) What would be the price if the required rate of return (or YTM) was 6oh in the above
situation?
oh anrutal coupon, 4.5 % current market interest rate.
C) 5 years Bond, 1000 Face value, 6
to the
Calculate Modified duration. What if there is a 1 7o increase in the yield? What happens
bond's price?
years to
D) Mr. X is looking to purchase a zero-coupon bond with a face value of Rs 1 ,000 and 5
maturity. The interest rate on the bond rs 5o/o compounded annually. What price will Mr.
X pay
for the bond today? And what will be the Yield to Maturity on it?
OR