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Discussion Question

Mr. Afzal has been offered to buy a bond from his friend Mr. Khan who bought it two years back at a par value of PKR 10,000 with a maturity period of 10 years and annual coupon rate of 12.25%. The market interest rate was 12.25% two years back, which is 9.5% now.

Mr. Khan has offered him the bond on same price i.e. PKR 10,000. Should Mr. Afzal buy it? Is it rational for Mr. Khan to sell the bond on par value? Support your comments with logical reasons.

 (Note: Your discussion should not exceed 150 words. No calculation is required; you are only supposed to discuss the scenario.)

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Replies to This Discussion

Again Bond Valuation

Yeh yar yeh porana GDB kyu post kardia apne??

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