One of the points below is the most accurate? a. A 10-year 10% coupon bond has a lower chance of reinvestment than a 10-year 5% coupon bond (assuming all else equal). b. The net return on a bond over a specified year is comprised by both the year's coupon interest payments and the shift in the bond's valuation from the start of the end of the year. c. The price of a 20-year 10% bond is less susceptible to interest rate fluctuations (and hence has less interest rate risk) than the price of a 5-year 10% bond. d. A $1,000 bond with $100 nominal interest payments and a five-year term (not likely to default) will sell for a discount if interest rates were below 9% and for a profit if interest rates were above 11%. e. All of the statements a, b, and c are true.
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:
47.
One of the points below is the most accurate?
a. A 10-year 10% coupon bond has a lower chance of reinvestment than a 10-year 5% coupon bond (assuming all else equal).
b. The net return on a bond over a specified year is comprised by both the year's coupon interest payments and the shift in the
c. The price of a 20-year 10% bond is less susceptible to interest rate fluctuations (and hence has less interest rate risk) than the price of a 5-year 10% bond.
d. A $1,000 bond with $100 nominal interest payments and a five-year term (not likely to default) will sell for a discount if interest rates were below 9% and for a profit if interest rates were above 11%.
e. All of the statements a, b, and c are true.
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