4FMG-1_041140597_-TMA-2.docx - BBF302/05 Financial Management and Analysis Date of submission Name IC no Student ID H/P no Tutorial Tutor On date Late

4FMG-1_041140597_-TMA-2.docx - BBF302/05 Financial...

This preview shows page 1 - 5 out of 10 pages.

BBF302/05 Financial Management and Analysis Date of submission [ ] On date [ ] Late Name KHOR HAO YUN IC no. 941222-07-5556 Student ID 041140597 H/P no. 017-4488422 Tutorial 4FMG1 Tutor SHAMINI AP SRIRENGAM
Image of page 1

Subscribe to view the full document.

QUESTION 1 (a) PALMA co Zico co Rex co PMT= 1000x 7.8%= 78 N= 10 I=6 FV=1000 PV=1132.48 PMT= 1000x7.5%=75 N= 17 I=9 FV=1000 PV=871.85 PMT= 1000x 7.957%=79.75 N= 4 I=8 FV=1000 PV=998.58 QUESTION 1(b) PALMA co Zico co Rex co PMT=78 FV=1000 PV=-1030 N=10 I=7.37 PMT=75 FV=1000 PV=-973 N=17 I=7.79 PMT=79.75 FV=1000 PV=1035 N=4 I=6.94 QUESTION 1( c )(i) PALMA co Zico co Rex co PMT= 1000x 7.8%= 78 N= 10 I=9 FV=1000 PV=922.99 PMT= 1000x7.5%=75 N= 17 I=12 FV=1000 PV=679.62 PMT= 1000x 7.957%=79.75 N= 4 I=11 FV=1000 PV=906.15 QUESTION 1( c )(ii) PALMA co Zico co Rex co PMT= 1000x 7.8%= 78 PMT= 1000x7.5%=75 PMT= 1000x
Image of page 2
N= 10 I=3 FV=1000 PV=1409.45 N= 17 I=6 FV=1000 PV=1157.16 7.957%=79.75 N= 4 I=5 FV=1000 PV=1105.49 QUESTION 1 (d) Interest rate risk also call market risk or price risk. It refer to the possibility of your income or capital loss will occur in your investment due to the changes in the level of interest rate that consequently affects bond price. Premium bond or discount bond is refer to a bond whether sell above or below its par value. Premium bond is selling above its par value while discount bond is selling below its par value. For example, Palma co and Rex co both having RM1000 as par value but it sell at RM1030 and Rm1035. Thus, it is Premium bond. In another side, Zico selling at RM973 and its par value is RM1000. Thus, it is discount bond. In addition, value of bond can affect used to differentiate premium or discount bond. For example, palma co the true value of bond after increase 3% in required rate of return means 9% is 922.99 and the bond currently selling at RM1030. Therefore, it is not worth to purchase due to the bond is considered as “overvalued”. This could represent that current market price (RM1030) is expensive since the true value of bond should be at 922.99. On the other hand, Zico co having 679.62 true value with 12% required rate of return, but it selling at RM973. Thus, it is worth to buy since it is still cheap in market. QUESTION 1 (e) Palma co Zico co Rex co PMT =78 PMT=75 PMT=79.75
Image of page 3

Subscribe to view the full document.

FV = 1000 N=10 I=6 (assuming current market interest is 6%) Bond price(PV)=1132.48 (- shall be ignored and same for next solution) CF0=0 CF1=78x 1= 78 CF2= 78 x2 =156 CF3= 78 x 3=234 CF4= 78 x 4=312 CF5= 78 x 5=390
Image of page 4
Image of page 5
  • Winter '16
  • Winnie Wong
  • Rex Co

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes