The ABC Corporation issues a 20-year, GH¢1000 bond with coupons j2 = 12%. The bond can be called, at par, after 15 years. Find the purchase price to yield 13% compounded semiannually.
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. The ABC Corporation issues a 20-year, GH¢1000 bond with coupons j2 = 12%. The bond
can be called, at par, after 15 years. Find the purchase price to yield 13% compounded semiannually.
2. A GH¢1000 bond that pays interest at j2 = 12% is redeemable at par at the end of 10
years. Find the purchase price to yield 10% compounded semiannually.
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