After graduation, you work as a Financial Analyst in a reputable multinational company in Kuala Lumpur. Your superior has assigned you a new task. You are required to analyse the following bonds. Company. Petron Berhad Shell Corporation Coupon rate per annum 10% 10% Maturity in years 15 10 Face value per bond $1,000 $1,000 Yield to maturity per annum 11% 13% Current selling price per bond $900 $1,100 Based on the above information, you are required to: a) Compute the current bond prices for both companies if the interest payment is once a year. b) Based on the above result, provide your conclusion. c) Discuss three main differences between conventional bond and Islamic bond.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
After graduation, you work as a Financial Analyst in a reputable multinational company in Kuala Lumpur. Your superior has assigned you a new task. You are required to analyse the following bonds.
Company. Petron Berhad Shell Corporation
Coupon rate per annum 10% 10%
Maturity in years 15 10
Face value per bond $1,000 $1,000
Yield to maturity per annum 11% 13%
Current selling
Based on the above information, you are required to:
a) Compute the current bond prices for both companies if the interest payment is once a year.
b) Based on the above result, provide your conclusion.
c) Discuss three main differences between conventional bond and Islamic bond.
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