A bond is sold at $98 of its face value ($100). Therefore, the bonds are: A) Sold at a discount because the stated rate of interest was lower than the effective (market) rate B) Sold for the $500,000 face amount less $10,000 of accrued interest. C) Sold at a premium because the stated rate of exceeds the effective (market) rate. D) Sold at a discount because the effective interest rate was lower than the stated (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:
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