yay Subject: Investment Management I (GEN eee en SSMENT TEST- 1 INTERNAL A Sem: Il Date: 04-11-2020 Max marks: 50 Tit Faculty: Mrs, P. R. Madhu Shree imi Instructions: Answer any 2 full sets out of 1, 2 & 3 and 4" is compulsory, Subject code: 18MBAFM302, 2,00 to 01.30 p.m. Bloo m’s | COs level 3) Explain Coupon Rate & Zero-Coupon Bond. mas ) Explain the types of Preference shares ae © Mr Akshay buys a bond with 4 years to maturity. The bond has a coupon rate & YTM of 9% and is priced at 2100 in the market. What is the duration of the bond? 0 Q2 ‘@) What is callable bonds? }b) Explain the Bond Management Strategies ©) Mr. Prakash is considering the purchase of a bond selling at £878.50. The bond has four years to maturity, with a face value of 21000 and 8% coupon. rate. The next annual interest payment is due after one year. The required rate of return is 10% i. Calculate the intrinsic value of the bond. Should Prakash buy the bond ii, Whats the value of bond if expected rate of return is 12% 2) A company’s Preference share are selling for €44 per share in the market and pay an annual dividend of 24.40 i, What is the expected Return Ifrate is 12% what is the value iii, Should investor acquire Preference share 1) Bharat Limited's earings and dividends have been growing at arate of 18% p.a. This growth rate is expected to continue for 4 years. After thatthe growth rate will decline to 12% for the next 4 years, Thereafter, the growth rate is expected to be 6% forever. Ifthe last dividend per share was 2 and the ‘investors required rate of return on Bharat’s equity is 15%, What is the Intrinsic Value per share? ©) Answer both the questions i, Consider a 21000 par value bond carrying an interest rate of, 15% payable annually & maturing after 5 years, The present price ofthis bond is 8850, The reinvestment rate to future cash flows ofthis bond is 16%, ‘has the following information of a bond: Face 1000, Coupon rate =10%, Time to maturty= 10 years; e= 1250, callable in 5 years = 21200, Find YTC. bonds name BOX flexi bond and COX safety bond. bonds are 10% & 12% respectively. Maturity period . Face Value of both the bonds is 21000. Current bond is 2964 and COX safety bond is 2850. Yield Scanned with CamScanner‘Scanned with CamScannerScanned with CamScannerant Pv ty , 155s? OFA sd Ace log? a2 fy ada DLS SI eee i22+ Rib-to = \ DMRABS | £ =f) 126S-82- VD 1y 2 \265-62- \2\b tho. ; te2oyeans. Scanned with CamScannerScanned with CamScanner