A fixed-income analyst, Sean, observes a 7-year, 8% semiannual-pay bond. the face amount is ¥1,000. He believes that the yield-to-maturity (YTM) on a semiannual bond basis should be 12.29%. Based on this yield estimate, the price of this bond would be A. ¥942.73. B. ¥900.89. C. ¥828.39. D. ¥802.40.
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 fixed-income analyst, Sean, observes a 7-year, 8% semiannual-pay bond. the face amount is ¥1,000. He believes that the yield-to-maturity (YTM) on a semiannual bond basis should be 12.29%. Based on this yield estimate, the price of this bond would be
¥942.73.
¥900.89.
¥828.39.
¥802.40.
A Bond is an instrument that represents the loan that is made by the investor to the company and after a certain period of time, the company has to return the amount to the investor. They generally carry a fixed interest rate till the maturity period. Bonds are of numerous types namely Euro Bonds, Foreign Bonds, Fixed-rate Bonds, Floating Bonds, Zero Coupon Bonds, Deep Discount Bonds etc.
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