The table below lists the terms to maturity, the coupon rates, coupon payment dates and yields to maturity for three UK government bonds at the close of business on 7th January 2018. Gilts Prices Close of Business 7th January 2018 Maturity Date Coupon Rate Coupon Payment Dates Yield to Maturity 07/04/2022 3.75% 7th April, 7th October 0.784735% 20/08/2027 1.70% 20th February, 20th August 1.394042% 07/06/2035 4.00% 7th June, 7th December 1.868424% The coupon rates are quoted as annual rates. But UK government bonds divide the annual coupon into two equal instalments payable every six months. Work out the time periods to maturity, the periodic coupons and the periodic yields for each of the three bonds.
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 table below lists the terms to maturity, the coupon rates, coupon payment dates and yields to maturity for three UK government bonds at the close of business on 7th January 2018.
|
Gilts Prices Close of Business 7th January 2018 |
|||
|
Maturity Date |
Coupon Rate |
Coupon Payment Dates |
Yield to Maturity |
|
07/04/2022 |
3.75% |
7th April, 7th October |
0.784735% |
|
20/08/2027 |
1.70% |
20th February, 20th August |
1.394042% |
|
07/06/2035 |
4.00% |
7th June, 7th December |
1.868424% |
The coupon rates are quoted as annual rates. But UK government bonds divide the annual coupon into two equal instalments payable every six months.
- Work out the time periods to maturity, the periodic coupons and the periodic yields for each of the three bonds.
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