Explain the advantages and disadvantages of having protective covenants placed into the bond contract/indenture (and indicate the yield required on the bond if such protective covenants into the indenture caused a change in the required yield by 45 basis points, where one basis point is 0.01%, so the change would be 0.01%x45=0.45%).
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:
Explain the advantages and disadvantages of having protective covenants placed into the bond contract/indenture (and indicate the yield required on the bond if such protective covenants into the indenture caused a change in the required yield by 45 basis points, where one basis point is 0.01%, so the change would be 0.01%x45=0.45%).
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
