Bank Beta has an inventory of AAA-rated, 10-year zero-coupon bonds with a face 2. value of $100 million. The bond's annual yield is 5% and its market value is 61.39 million. The daily maximum potential adverse move in yields is 35 basis points. What is the bond's daily earning at risk?
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:
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