Nur wants to buy a bond from petrol berhad and her broker, Financial Management

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Nur wants to buy a bond from petrol berhad and her broker

Nur wants to buy a bond from petrol berhad and her broker quotes a price of $1,170. She feels that the bond might be overpriced as it is more than the par value of $1000.The following information pertains to bond:-

coupon rate = 13 percent

maturity = 18 years remaining

current yield maturity (YTM) = 10 percent

i. Calculate the intrinsic value of the bond

ii. Is the bond overpriced? Justify your answer.

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Financial Management: Nur wants to buy a bond from petrol berhad and her broker

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Financial Management: Nur wants to buy a bond from petrol berhad and her broker

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