If a $10,000 face-value discount bond maturing in one year is selling for $6,000, then its yield to maturity is_______% (round UP to two decimal places xx.xx).
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:
1. If a $10,000 face-value discount bond maturing in one year is selling for $6,000, then its yield to maturity is_______% (round UP to two decimal places xx.xx).
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the price of this bond is $1,000. |
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the price of this bond is greater than $1,000. |
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the price of this bond is less than $1,000. |
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the buyer of the bond will receive $24.2 payment from the bond issuer every year before maturity while holding the bond. |
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the buyer of the bond will receive $32.5 payment from the bond issuer every year before maturity while holding the bond. |
3. What is the
4. The current interest rate on a 10-year treasury note (with face value = $100 and annual coupon rate = 2.625%) is 3.37%. The buyer of this note will receive $ ____ payment from the treasury every year before maturity while holding the bond.
Dear student, as per Bartleby answering guidelines we can answer only the first question if the student post multiple questions at a time. Therefore I am answering the only first question, for getting the answer to the remaining questions please re-post the remaining questions.
Zero-coupon bond: Zero-coupon bond did not pay any interest on the bond face value, But it issues at a discounted price and redeems at maturity at face value.
This question provides that zero-coupon bond selling at $ 6000 and having a face value $ 10000 and asking the yield to maturity.
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