CORPORATE FINANCE ASSIGNMENT

POOJA SUNKI
26109
SECTION C

Yield to maturity = 9.16%

Coupon Rate = 9.25%

Face value = Rs. 10,00,000

Maturity period (n) = 4 years 3 months 8 days (taking from 2021) 

Payment to be made - Annually 

Bond value/ Bond price =?

C = 9.25%*10,00000 
C = Rs. 92,500
r = 0.0916
n = 4.25
P = 1000000

Bond price = 92,500 (1-(1/ (1+0.0916) ^4.25)/0.0916) + 10,00,000/ (1+0.0916) ^4.25

Bond price = 1003055.5087

INTERPRETATION: As the Bond Price is more than the face value, this bond is a premium
bond. A bond might trade at a premium because its interest rate is higher than the current
market interest rates.
Aditya Birla Finance Limited’s Credit rating is AAA, which is an investment grade bond.
The company's credit rating and the bond's credit rating can also push the bond's price higher.
Investors are willing to pay more for a creditworthy bond from the financially viable issuer.