3.36. A bond pays interest semiannually and it will mature after six years. The required rate of return by the bondholders is 14% per year, and the face amount of the bond is $1000. If the market price of the bond is $920.60, find its coupon rate.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
