Chapter 1

INTRODUCTION

1 INTRODUCTION OF THE INTERNSHIP

Internship is a part of the MBA program, the main objective

of the project is to work in an organization and to get the
knowledge about the management skills and that would be
useful for the future career building.
In this study i got the knowledge about buying and selling of
shares in the market.

1.1 TOPIC CHOSEN FOR THE STUDY

A study on valuation of selected bonds in India

1.2 INTRODUCTION TO THE TOPIC

The project consists of two reports they are part A and part B.
Part A consists about the company profile, place of operation,
SWOT analysis, analysing and interpretation of the financial
condition. Part B is about the company basic analysis.
In order to evaluate the bond we need to find CY, YTM and
bond duration. It can be sold for more than the actual value,
less than the actual value or equal to the actual value.
The main intention of the study is to know the rate of return,
which sector is performing well, to find out whether the bond
is undervalued or overvalued. Valuation of bond is done in
order to give a clear information about the performance of
bonds to the investors for better investment.

1.3 NEED FOR THE STUDY

For the study on valuation of bonds we need to find CY, YTM
and duration of the bond. This study is done in order to
identify the bond value, to compute the rate of return and also
to calculate the price changes.
In order to do a study on valuation of bonds we need to collect
information such as face value of bond, market price of bond,
coupon rate and the maturity. This also includes selection of
top ten performing government bonds and corporate bonds.

1.4 OBJECTIVE OF THE STUDY

To find out whether the bond is overvalued or
undervalued for better investment decision.
To determine the rate of return involved in the selected
bonds in India.
To analyse the bond duration of selected bonds using
Macaulays duration method.
1.5 SCOPE OF THE STUDY
The study of valuation of bond gives details about the risk and
return attached to it. Its actual value, its modified duration etc.
It also gives information about the changes in the prices as
well as how the bond is performing, how sensitive is the bond
to the changes in the price and the interest rate.

1.6 METHODOLOGY