MP Ltd issued a new series of bonds on 1st January, 2000. The bonds were sold at par (Rs.1000), having a coupon rate of 10% p.a. and mature on 31st December, 2015. Coupon payments are made semiannually on 30th June and 31st Dec each year. Assume that you purchased an outstanding bond on 1st March, 2008 when the on going interest rate was 12%. Required:
(i) What was the YTM of the bonds as on 1st January, 2000?
(ii) What amount you should pay to complete the transaction? Of that amount how much should be accrued interest and how much would represent bond's basic value.