1.

JB007 Bhd is a company producing health medical supplies had invited public to
subscribe a straight bond issued by the firm in the year 2019. Beginning of January
2020, Mr. James purchased a bond from JB007 Bhd with the following information:

Annual coupon payment : RM 100

Maturity Date : December 2030
Principal at par value : RM 1,000
Required:

Calculate for the yield to maturity if the bond is currently selling at RM 1,250 in the
market.

2. VDT Bhd plans to issue a bond as part of funding the firm’s capital expenditure projects.
VDT Bhd will issue a 7% convertible bond with 5 years of maturity period. The bond has
a par value of RM100. The market price for the VDT Bhd’s share is RM6.50 and the
conversion price is 5% of the par value of the bond. Current market price for the bond is
RM115.

Required:

Advise whether it is profitable for the bondholders to convert their bonds into common
stock.