Question One Bionica plc is a biomedical company that specialises in vaccines. Bionica has just...
50.1K
Verified Solution
Link Copied!
Question
Finance
Question One
Bionica plc is a biomedical company that specialises in vaccines. Bionica has just issued a 10 year bond with an annual yield to maturity of 5%. The bond pays an annual coupon of 6%. Assume that the par value of the bond is 100.
a) Would you expect the price of the bond to be above or below par value? Explain your answer. (4 marks)
b) Calculate the annual coupon payment and the bond price today (9 marks)
c) Assume that in 1 years time Bionica secures a patent for a vaccine which has proven to be effective in protecting people against malaria. On announcement of this news the yield on the bond fell by 1%.
i. Calculate the new bond price
ii. Explain why the yield on the bond has fallen, refer to risk in your answer
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.