A 10-year, 12% semiannual coupon bond with a par value of $1,000 may becalled in 4 years at a call price of $1,060. The bond sells for $1,100. (Assumethat the bond has just been issued.)a. What is the bond’s yield to maturity?b. What is the bond’s current yield?c. What is the bond’s capital gain or loss yield?d. What is the bond’s yield to call?
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:
A 10-year, 12% semiannual coupon bond with a par value of $1,000 may be
called in 4 years at a call price of $1,060. The bond sells for $1,100. (Assume
that the bond has just been issued.)
a. What is the bond’s yield to maturity?
b. What is the bond’s current yield?
c. What is the bond’s
d. What is the bond’s yield to call?
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