1.A 15-bond of a nominal amount of 10,000 THB, bearing semi-annual coupons of 6% pa, to be redeemed at 98%. Calculate a) An investor who is subject to income tax at 30% and CGT at 20% buys this bond for 9,000 THB. Calculate the net yield per annum for this transaction.
b) If the investor wishes to obtain a net redemption yield of 7% pa, calculate the price that the investor should pay for the bond.

2. A company issues a bond of nominal 100 THB amount with a term of 15 years and a coupon of 7% convertible semiannually, to be redeemed at par.
a) Calculate the price of the bond if it is priced at issue to give a redemption yield of 8% pa effective to a non-tax paying investor.
b) Investor A liable to income tax at 25% and capital gain tax at 20% bought the bond on the issue date. Just after the 15th coupon payment, the investor A sold the bond to Investor B. The investor B, subject to income tax at 30% and capital gain tax at 30% paid the price that gives a net redemption yield of 6.5%. Calculate the price that investor B paid.
c) Calculate the realised yield for Investor A’s transaction.