Company has issued two series of bonds A and B. They have the following characteristics: Bond A Bond B Face Value ₹ 100 ₹ 100 Coupon Rate 14% 14% Current market price ₹ 100 ₹ 100 Term to maturity 4 years 7 years Coupon P

Company has issued two series of bonds A and B. They have the following characteristics: Bond A Bond B Face Value ₹ 100 ₹ 100 Coupon Rate 14% 14% Current market price ₹ 100 ₹ 100 Term to maturity 4 years 7 years Coupon Payment Annually Annually If the interest rates fall by 1%, what would be the new market price of the bonds? Note: (1) Present Value (PV) interest factor of annuity (PVIFA), 13% for 4 years = 2.9745, 13% for 7 years = 4.4226. (2) Present value (PV) of ₹1 that is (1+r)^n where r = interest rate, n = number of period until receipt. Present value, where r (13%) and n (period) 4 years, PV = 0.613 and r (13%) and n (period) 7 years, PV = 0.425.