the current interest rate on a 10-year coupon bond (with face value= $1,000 and annual coupon rate = 3.25%) is 2.42%. This implies ______ (there may be more than one answer) the bond is traded on the market for $1000 the buyer's return for holding the bond for 10 years will be 3.25% the buyer's return for holding the bond for 10 years will be 2.42% the buyer of the bond will have a return of 2.42% if she sells the bond next year. the buyer of the bond will have a return of 3.25% if she sells the bond next year.
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:
the current interest rate on a 10-year coupon bond (with face value= $1,000 and annual coupon rate = 3.25%) is 2.42%. This implies ______ (there may be more than one answer)
the bond is traded on the market for $1000
the buyer's return for holding the bond for 10 years will be 3.25%
the buyer's return for holding the bond for 10 years will be 2.42%
the buyer of the bond will have a return of 2.42% if she sells the bond next year.
the buyer of the bond will have a return of 3.25% if she sells the bond next year.
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