A coupon bond that pays interest of R40 semi annually has a par value of R1,000, matures in 4 years, and is selling today at a R36 discount from par value. The yield to maturity on this bond is __________. A. 8.69% B. 9.09% C. 10.43% D. 9.76% E. None of these is correct.
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 coupon bond that pays interest of R40 semi annually has a par value of R1,000, matures in 4 years, and is selling today at a R36 discount from par value. The yield to maturity on this bond is __________.
- A. 8.69%
- B. 9.09%
- C. 10.43%
- D. 9.76%
- E. None of these is correct.
Step by step
Solved in 3 steps with 2 images
