Consider three bonds with 5.9% coupon rates, all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. a. What will be the price of each bond if their yields increase to 6.9%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 30 Years 4 Years 8 Years %$4 Bond price $. 24 b. What will be the price of each bond if their yields decrease to 4.9%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 30 Years 8 Years 4 Years Bond price $. %24
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:
![Consider three bonds with 5.9% coupon rates, all selling at face value. The short-term
bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the
long-term bond has maturity 30 years.
a. What will be the price of each bond if their yields increase to 6.9%? (Do not round
intermediate calculations. Round your answers to 2 decimal places.)
30 Years
4 Years
8 Years
Bond price
b. What will be the price of each bond if their yields decrease to 4.9%? (Do not round
intermediate calculations. Round your answers to 2 decimal places.)
8 Years
30 Years
4 Years
Bond price
%24
%24
%24
%24
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3f86440-c463-4c9d-9297-c21c197940b5%2F402e4e58-90dd-45a4-85ed-ee7ca4d3f587%2Fkacf71_processed.jpeg&w=3840&q=75)
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