Perry Inc.'s bonds currently sell for $1,310. They have a 4-year maturity, an annual coupon of $77, and a par value of $1,000. What is their current yield? Group of answer choices 6.29% 5.35% 5.88% 6.17% 6.05%
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:
Current Yield: The current yield on the bond is calculated as coupon payment divided by the current market price.
Current Yield = [Coupon Payment / Current Market Price ] * 100
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