ASSIGNMENT

JLR Case analysis

Submitted by -: Vineet Chauhan

Roll No -: 13 PT 2 -33

i)

ii)

The bonds of JLR are presently trading at 11 % as can be seen by Exhibit 5 ,therefore JLR has
to pay a premium of between 11-15 % because the old bondholders may want to demand
more than what present market situation is
But in case of company B as its default risk has remained same it has to buy back old bonds
with anything between 15-24 %

iii)

For JLR the its default risk has come down due to improvement in its fundamentals without
any reduction in the nominal risk free rate due to this therefore there would be opportunity
in market for old bond holders to receive high coupon payments
But for Company B as the nominal risk free rate has gone down which has resulting in
affecting all the companies in the Industry resulting in less opportunities for receiving high
coupon payments in the market.