ELECTRON Computers just issued a bond that matures in 8 year equal to $1,000 and its coupon rate is equal to 7.5%. Interest payr annually. The yield to maturity on the bond is 7%. a. This type of bond is called: OYield bond OCoupon bond ODiscount bond b. Calculate the value of the coupon payment.
ELECTRON Computers just issued a bond that matures in 8 year equal to $1,000 and its coupon rate is equal to 7.5%. Interest payr annually. The yield to maturity on the bond is 7%. a. This type of bond is called: OYield bond OCoupon bond ODiscount bond b. Calculate the value of the coupon payment.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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:
Question
Transcribed Image Text:ELECTRON Computers just issued a bond that matures in 8 years. Its par value is
equal to $1,000 and its coupon rate is equal to 7.5%. Interest payments are made
annually. The yield to maturity on the bond is 7%.
a. This type of bond is called:
OYield bond
OCoupon bond
ODiscount bond
b. Calculate the value of the coupon payment.
Coupon payment = $
c. Calculate the value of the bond today. Use two decimal places and report a
positive number.
VB = $
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