Compute the price of a 6.2 percent coupon bond with 10 years left to maturity and a market interest rate of 10.2 percent. (Assume interest payments are semiannual.) Is this a discount or premium bond?
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:
Compute the price of a 6.2 percent coupon bond with 10 years left to maturity and a market interest rate of 10.2 percent. (Assume interest payments are semiannual.)
Is this a discount or premium bond?
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