I have a five year zero coupon bond is burrently trading at yield to maturity of 9.3%. An eight year zero coupon bond is currently trading at a yeild of 8.2%. What does the market expect that the three year rate will be in 5 years from now (i.e. what is the implied three year forward rate in 5 years)?
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:
I have a five year zero coupon bond is burrently trading at yield to maturity of 9.3%. An eight year zero coupon bond is currently trading at a yeild of 8.2%. What does the market expect that the three year rate will be in 5 years from now (i.e. what is the implied three year forward rate in 5 years)?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
