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Assignment/Project Title :
Group Name:
GROUP 3-HONG K
Submitted on:
7/4/2015
Sl. No.
1
2
3
4
5
6
Contribution %
0.16666
0.16666
0.16666
0.16666
0.16666
0.16666
Should be equal to 100%
100%
d be equal to 100%
Answer to Question 1
IDBI issued the bonds when the interest rates in the market were hovering around 12%. Po
2001, the interest rates had come down to a level of 7%-7.5%** whereas the yields of th
high as 15.54%. Therefore it would have been logical for IDBI to call back the bonds to av
interest payments on the bonds issued. It could then issue bonds around the market rate
be substantially lower than the current interest being payed by them on their existing bond
on the interest payments
** Source
http://www.allbankingsolutions.com/Banking-Tutor/Chronology-Bank-Rate-India.shtml
tion 1
hovering around 12%. Post Marchwhereas the yields of the bonds were as
all back the bonds to avoid excess
s around the market rates which would
em on their existing bonds thus saving
k-Rate-India.shtml
Bonds Called
Information Given
Issue Date
Maturity Date
Issue Price
Maturity Price
Coupon rate
Frequency
31-Mar-92
31-Mar-17
Rs. 2,700
Rs. 100,000
0%
0
Redemption
Value
Rs. 5,700
Rs. 12,000
Rs. 25,000
Rs. 50,000
Call Date
31-Mar-97
31-Mar-02
31-Mar-07
31-Mar-12
2700
Amount Received
10713
Years Held
16.55%
Return on Investment
Case 2: Secondary Investor (Buyers of Bonds from the primary investors in the
secondary market on 31st March 2001
Amount Invested
Amount Received
Years Held
10713
100000
16
14.98%
Return on Investment
.
10713
Comments
Gains
lose
Int R
Issue price Face Value Pay
Information Given
Yield Calculations
Issue Date
Maturity Date
Issue Price
Maturity Price
Coupon rate
Frequency
Rs.2,700
31-Mar-92
31-Mar-17
Rs. 2,700
Rs. 100,000
0%
0
Primary Investor
YTM Calculation
Redemption
Value
Rs. 100,000
Maturity Date
31-Mar-17
Rs.1,00,000
on March 31,
2017
Secondary Inve
Yield To
Maturity
15.54%
Issue Date
Issue Price
YTC Calculation
Redemption
Value
Rs. 5,700
Rs. 12,000
Rs. 25,000
Rs. 50,000
Call Date
31-Mar-97
31-Mar-02
31-Mar-07
31-Mar-12
N.A
YTC Calculat
Yield To Call
16.12%
16.09%
15.99%
15.71%
Redemption
Value
Rs. 12,000
Rs. 25,000
Rs. 50,000
Int Rate/
price Face Value Paymt Date Details
700
Rs.1,00,000
on March 31,
2017
N.A
Secondary Investor
31-Mar-01
10713
YTC Calculation
Call Date
31-Mar-02
31-Mar-07
31-Mar-12
Yield To Call
12.01%
15.17%
15.03%