A bond sold one month ago for £107. The bond is worth £112 in today's market. Assuming no changes in risk, which of the following is true? A. The bond's current yield has increased from one month ago. B. The bond must have at least 5 years before maturity. C. Interest rates must be higher now than they were one month ago. D.The coupon payment of the bond must have increased. E. None of the above
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 bond sold one month ago for £107. The bond is worth £112 in today's market. Assuming no changes in risk, which of the following is true?
A. The bond's current yield has increased from one month ago.
B. The bond must have at least 5 years before maturity.
C. Interest rates must be higher now than they were one month ago.
D.The coupon payment of the bond must have increased.
E. None of the above
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