Strategic financial mangement

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Querist : Anonymous

Querist : Anonymous (Querist)

04 August 2011 XL Ispat Ltd. has made an issue of 14 per cent non-convertible debentures on January 1,2007. These debentures have a face value of Rs.100 and is currently traded in the market at a price of Rs.90.Interest on these NCDs will be paid through post-dated cheques dated June 30 and December 31. Interest payments for the first 3 years will be paid in advance through post-dated cheques while for the last 2 years post-dated cheques will be issued at the third year. The bond is redeemable at par on December 31, 2011 at the end of 5 years.
Q)Assuming that intermediate coupon payments are, not available for reinvestment calculate the realised yield on the NCD.
Pl.provide answer for the above question with detailed workings.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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04 August 2011 What you will do with the answer. Are you going to buy the Debentures. If yes then be sure that the entire outstanding interest is received by you at the time of redumption

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