A bond with a 5% coupon rate, with a face value of £250 pays coupons semi-annually. The bond has a maturity of 1.9 years. The required yield is 6% which is discounted at a semi-annual rate. Complete the following table and calculate the bond’s dirty price. Time to payment Cash flow (£) Discount factor (Calculate to 3 decimal places) Discounted cash flow (£) (Calculate to 2 decimal places) Dirty price (£)
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:
3.
A bond with a 5% coupon rate, with a face value of £250 pays coupons semi-annually. The bond has a maturity of 1.9 years. The required yield is 6% which is discounted at a semi-annual rate. Complete the following table and calculate the
| Time to payment | Cash flow (£) | Discount factor (Calculate to 3 decimal places) | Discounted cash flow (£) (Calculate to 2 decimal places) | Dirty price (£) |
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