Rogoff Co.'s 13-year bonds have an annual coupon rate of 9.66%. Each bond has face value of $1,000 and makes semiannual interest payments. If you require an 11.36% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? Group of answer choices $965.67 $903.66 $947.95 $885.94 $832.78
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:
Since the payments are done semi annually
Therefor in this case
rate will 11.36 / 2 = 5.68%
Coupon (PMT) will be $1000*9.66%*(1/2) = $48.30
NPER will be 13*2 = 26
FV 1000
For price using PV function in excel
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