Assume you have some money and want to save to amass a given amount at the end of 5 years. One of the options you have is a 5-year, 10% coupon bond that is currently selling at par. Assume that bond is default free. What will determine the total amount of money you will have at the end of year 5 if you buy the bond today?
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:
Assume you have some money and want to save to amass a given amount at the end of 5 years.
One of the options you have is a 5-year, 10% coupon bond that is currently selling at par. Assume that bond is default free.
What will determine the total amount of money you will have at the end of year 5 if you buy the bond today?
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