A corporate bond has a nominal or observed yield of 9.8%. Your sister, the famous economist, has given you the following estimates: Inflation-risk premium = 3.00% Default-risk premium = 2.10% Maturity premium = 1.90% Liquidity premium = 0.50% On the basis of these data, what is the best estimate of the real risk-free rate of return?
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 corporate bond has a nominal or observed yield of 9.8%. Your sister, the famous
economist, has given you the following estimates:
Inflation-risk premium = 3.00%
Default-risk premium = 2.10%
Maturity premium = 1.90%
Liquidity premium = 0.50%
On the basis of these data, what is the best estimate of the real risk-free
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