The callable bond has a par value of 100LT,8% coupon rate and five years to maturity. The bond makes annual interest payment. Investors purchased this bond for 90 LT when it was issued in May 2008. A. What is the yield-to-maturity of this bond? B. What is the duration of this bond if currently it's market price is 95 LT? C. If this bond would be called in May 2010 for 98 LT, what would be the yield-to-call of this bond?
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:
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