1) The face value of 10 year 10% bond ( with 10 coupon rate interest ) is Rs 1,000 . Assuming 12 % required rate of return of investors , compute the value of the bond. What price would the investor be willing to pay , if the interest is payable annually.

2) Assume i) Rs.100 par value ii)8% coupon rate of interest and iii)10 years remaining to maturity date; If interest rate is paid annually find the value of bond when required rate of return is i)7% ii) 8 % and iii) 9% indicate the nature of selling the bond either at discount/ premium/par

3)The share of a certain stock paid a dividend of Rs.2.00 last year (D0=Rs.2.00) The dividend is expected to grow at a constant rate of 6 percent rate in the future . The required rate of return on this stock is considered to be 12 percent . How much the stock should sell right now ? Assuming that the expected growth rate and required rate of return remain the same at what price should the stock sell 2 years hence?

4) The bonds of the premier company ltd are currently selling for Rs.10,800 Assuming i) coupon rate of interest 10 % ii) par value Rs.10,000 iii) years to maturity 10 years iv) annual payment . Compute the YTM

5) IDBI, in its issue of Flexibonds-3 offered growing interest bond . The interest will be paid to the investors every year at the rates given below and the minimum deposit is Rs.5,000 . Calculate the yield to Maturity (YTM)

| |Interest Per Annum | |Year 1 |10.5 | |Year 2 |11.00 | |Year 3 |12.50 | |Year 4...

...MBA 8135
Practice Bond ValuationProblems
SOLUTIONS
1. Calculate the current price of a $1,000 par value bond that has a coupon rate of 6% p.a., pays coupon interest annually, has 14 years remaining to maturity, and has a yield to maturity of 8 percent.
PMT = 60; FV = 1000; N = 14; I = 8; CPT PV = 835.12
2. You intend to purchase a 10-year, $1,000 par value bond that pays interest of $60 every six months. If the yield to maturity is 10% with semiannual...

...Valuation of securities:
RBI has issued guidelines for valuing both the quoted and unquoted securities.
Valuation of Quoted Securities:
The market value for the purpose of periodical valuation of investments included in the Available for Sale and the Held for trading categories would be the market price of the scrip from any of the following sources:
• Quotes/Trades on the Stock exchanges
• SGL...

...Equity Valuation: Discounted Cash Flow and Residual Income Models
Introduction
Valuation plays a very important role when companies are trying to increase their value, raise money, acquire another firm or sell a subsidiary, also when a company decides to go public.
Managers, investors and shareholders need to have the most accurate and reliable information in order to make decisions, that is why valuation is a fundamental exercise in corporate...

...Valuation :
* Price earnings ratio :
DESCRIPTION | Mar-12 | Mar-11 | Mar-10 | Mar-09 | Mar-08 |
Price-earnings ratio | 23.04 | 24.23 | 12.71 | 7.25 | 12.17 |
This ratio reflects the following factors : growth prospects, risk characteristics ,shareholder orientation ,corporate image and the degree of liquidity.It indicates company performance and forecast future performance.Ratio is decreasing and it is good sign because investors will get high...

...VALUATION TECHNIQUES
Vault Guide to Finance Interviews Valuation Techniques
How Much is it Worth?
Imagine yourself as the CEO of a publicly traded company that makes widgets. You’ve had a highly successful business so far and want to sell the company to anyone interested in buying it. How do you know how much to sell it for? Likewise, consider the Bank of America acquisition of Fleet. How did B of A decide how much it should pay to buy Fleet? For starters,...

...depreciation. That is why D&A and Capex converge over time.
Changes in Working Capital are estimated by Bloomberg:
III - DISCOUNTED CASH FLOW
Firm Valuation
The unstable historical leverage of Amazon as well as the fact that the company never declared or paid cash dividends on their common stock, encourages us to use a Firm Valuation.
Weighted Average Cost of Capital
Beta
A sample of peers is determined in order to calculate an average Beta for the...

...CHAPTER 4 BONDS ANND THEIR VALUATION
Bond value--semiannual payment 1. You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond?
N = 20 I/Y = 5 PV = -1124.62 PMT = 60 FV = 1000 Bond value--semiannual payment 2. Assume that you wish to purchase a 20-year bond that has a maturity value of $1,000...

...CHAPTER 7
Bonds Valuation
CHAPTER ORIENTATION
This chapter introduces the concepts that underlie asset valuation. We are specifically concerned with bonds. We also look at the concept of the bondholder's expected rate of return on an investment.
CHAPTER OUTLINE
I. Types of bonds
A. Debentures: unsecured long-term debt.
B. Subordinated debentures: bonds that have a lower claim on assets in the event of liquidation than do other senior...

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