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:What will be the position, if he opts for redemption?
Answer & Explanation:
Option II: Redemption Interest earned = ₹10000 x 2% x 2 years = ₹400 Total amount earned if redeemed = ₹10000 (Principal) + ₹400 (Interest) = ₹10400
Topics: Corporate Funding
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