A company has just raised $6 million by issuing 4000 12-year 11% bond at par. It's predicted that the market yield of this type bonds would be 2.2 per cent lower than coupon rate after 3 years. What will be the expected price of this bond after 3 years? Need the step by step process to get the answer
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 company has just raised $6 million by issuing 4000 12-year 11% bond at par. It's predicted that the market yield of this type bonds would be 2.2 per cent lower than coupon rate after 3 years. What will be the expected price of this bond after 3 years?
Need the step by step process to get the answer
Step by step
Solved in 6 steps with 1 images
