ASSIGNMENT JLR Case analysis Submitted by -: Vineet Chauhan Roll No -: 13 PT 2 -33

i)

ii) The bonds of JLR are presently trading at 11 % as can be seen by Exhibit 5 ,therefore JLR has

to pay a premium of between 11-15 % because the old bondholders may want to demand

more than what present market situation is

But in case of company B as its default risk has remained same it has to buy back old bonds

with anything between 15-24 %

iii) For JLR the its default risk has come down due to improvement in its fundamentals without

any reduction in the nominal risk free rate due to this therefore there would be opportunity

in market for old bond holders to receive high coupon payments

But for Company B as the nominal risk free rate has gone down which has resulting in

affecting all the companies in the Industry resulting in less opportunities for receiving high

coupon payments in the market.