The market value of floating-rate debt of $200,000 will: Multiple Choice rise by $2,000 with a 1% rise in interest rates. fall by $2,000 with a 1% fall in interest rates. remain unchanged with a change in interest rates. will rise in the short run and fall in the long run with a change in interest rates.
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 market value of floating-rate debt of $200,000 will:
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rise by $2,000 with a 1% rise in interest rates.
-
fall by $2,000 with a 1% fall in interest rates.
-
remain unchanged with a change in interest rates.
-
will rise in the short run and fall in the long run with a change in interest rates.
Floating Rate debt:
A bond or a debt that carries a floating rate of interest will pay varying coupons in each period, depending on how the interest rates move.
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