Fahad & co issued a 10-year bond at par and promised to pay an annual coupon rate of 9%. Find the following if The required rate of return by the investor is 7%, 9% and 11% find the value of the bond today? Find the price of the bond in 4th year if rate of return required by the investor is 7% . Find the price of the bond in 6th year if rate of return required by the investor is 11%. Draw the timeline for this bond, showing current price
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:
Q.1. Fahad & co issued a 10-year bond at par and promised to pay an annual coupon rate of 9%. Find the following if
- The required
rate of return by the investor is 7%, 9% and 11% find thevalue of the bond today? - Find the price of the bond in 4th year if rate of return required by the investor is 7% .
- Find the price of the bond in 6th year if rate of return required by the investor is 11%.
- Draw the timeline for this bond, showing current price
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