A 2-year, zero coupon Treasury bond with a maturity value of $1,000 has a price of $873.4387. A 1-year, zero coupon Treasury bond with a maturity value of $1,000 has a price of $938.9671. If the pure expectations theory is correct, for what price should 1-year, zero coupon Treasury bonds sell one year from now? a. $798.89 b. $824.66 c. $852.28 d. $930.23 e. $989.11
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:
7A-14. A 2-year, zero coupon Treasury bond with a maturity value of $1,000
has a price of $873.4387. A 1-year, zero coupon Treasury bond with a
maturity value of $1,000 has a price of $938.9671. If the pure
expectations theory is correct, for what price should 1-year, zero
coupon Treasury bonds sell one year from now?
a. $798.89
b. $824.66
c. $852.28
d. $930.23
e. $989.11
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