Bond Valuation: Preeti Jaiswal’s Dilemmas
On May 1st 2015, Preeti Jaiswal (Preeti) was promoted as Junior Software Engineer at Brilliant Software Solutions Pvt. Ltd., located in Bangalore, India. Preeti had always been very enthusiastic, jubilant and inquisitive by nature. However, she had a mediocre academic track record. Interestingly, she fared very well in extracurricular activities, especially in sports. Realising her potential in sports, her badminton coach at school encouraged her to pursue sports. Due to her dedication and perseverance, she was successful in streamlining her high energy levels productively and made a mark in various national and international badminton competitions. Though her parents were quite happy with her sports track record, they were still very anxious about her low grades in academics. As she was gearing up to give engineering entrance exams, her parents were apprehensive about her ranks too. However, when the entrance results were announced, their happiness was boundless as she could gain admission into one of the premier engineering institutions in India through sports quota........
Indian Bond Markets: Status Quo
Preeti tried to make a note of the gist of the given information. Preeti observed that the Indian bond markets were performing well in recent years. Like any other country, India also issued both government bonds as well as corporate bonds though it has been predominantly dominated by government bond issues. Generally, governments issue bonds to facilitate the mobilisation of funds to support the infrastructural development. Bonds in India are popularly referred to as debentures. There were several types of bonds issued by financial institutions and government which include public sector undertaking bonds, capital gains bonds, zero coupon bonds, emerging markets bonds, tax-savings bonds, etc.............
Preeti’s Dilemmas
Preeti could gather a fair idea of the Indian bond markets and the current status after going through the information provided by Reena. However, as she endeavored to invest in bond markets, most of the terminology like face value, coupon rate, current yield, yield to maturity, bond pricing theorems sounded Greek and Latin for her..............
Assignment Questions
I. What do you understand by Bonds? What are the differences between bonds and stocks?
II. What is a Bond’s price? How do you value a bond?
III..............
Exhibits
Exhibit I: Foreign Bonding
Exhibit II: Percentage of Outstanding Par Amount in the S&P Pan Asia Bond Index