Sunrise Ltd. issued bonds with following terms: Issue price per bond ₹ 1,000 Coupon rate 2% and maturity period 2 years The investor will have option to convert the bonds into equity shares at ₹ 100 per share on maturity
CS Professional · Corporate Funding & Listings in Stock Exchanges · PYQS · June 2025
Sunrise Ltd. issued bonds with following terms: Issue price per bond ₹ 1,000 Coupon rate 2% and maturity period 2 years The investor will have option to convert the bonds into equity shares at ₹ 100 per share on maturity date, or alternatively claim full redemption. The market price per share on maturity date is ₹ 250. Mr. Sharma who subscribed 10 bonds desires to convert into equity:How many shares will he get on maturity date?
Answer & Explanation:
Issue price per bond is ₹1000 and 10 bonds were subscribed. Total investment ₹10000. Coupon rate 2%. Maturity date 2 years. Option I: Conversion of Bonds into shares Interest earned = ₹10000 x 2% x 2 years = ₹400 Total amount received if redeemed = ₹10000 (Principal) + ₹400 (Interest) = ₹10400 Number of Equity Shares Mr. Sharma will get @ ₹100 per share at Maturity = ₹10400 / ₹100 = 104 equity shares
Topics: Corporate Funding
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