value this bond, and decide buy or sell?
Issuer
?Oman International Development & Investment Company SAOG
(OMINVEST)
Nominal Value, Issue Price and Denomination
?RO 1.000
Minimum Purchase Amount
?RO 100,000
Initial Interest Rate 7.75
Payment : Semi-annual
Maturity / Redemption
?Perpetual
| To find the value of the bond | ||||||
| Issue price | 1 | |||||
| Minimum Purchase Amount | 100,000 | |||||
| Initial Interest Rate | 7.75% | |||||
| Semiannual Rate | 3.88% | |||||
| Maturity | Perpetual | |||||
| Semiannual Interest | 3,875.00 | |||||
| Value of Perpetual Bond | Interest/Discount Rate | |||||
| Value of Perpetual Bond | 100,000.00 | |||||
| Conclusion | Since No information about discount rate has been given in the question, coupon rate has been assumed as the discount rate. By doing so the value of bond will be at Par. So it is neither benefit nor loss to purchase the bond. It will be an indifferent to buy the bond. | |||||
| Buy/Sell | Indifferent | |||||
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