investors holding our 4-year bonds (Bond #1) receive interest income annually for four years, plus the face value of the bonds at maturity, a. If the expected rate of return on our bonds is 10%, what is the duration of Bond #1? Given the following projected income stream for Bond #1: year coupon interest face value 1 100 2 100 3 100 4 100 1,000 total income in yeear 4 400 1,000
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:
If investors holding our 4-year bonds (Bond #1) receive interest income annually for
four years, plus the face value of the bonds at maturity,
a. If the expected
Bond #1?
Given the following projected income stream for Bond #1:
year coupon interest face value
1 100
2 100
3 100
4 100 1,000
total income in yeear 4 400 1,000
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