An OMR 80,000 bond issue sold for 98. Therefore, the bonds were: Select one: a. Sold at a discount because the stated rate of interest was lower than the effective rate. b. Sold at a premium because the stated rate of interest was higher than the yield rate. c. Sold for the OMR 80,000 face amount less OMR 10,000 of accrued interest. d. Sold at a discount because the effective interest rate was lower than the coupon rate
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:
An OMR 80,000 bond issue sold for 98. Therefore, the bonds were:
| Sold at a premium because the stated rate of interest was higher than the yield rate. |
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