There is a 5 year zero coupon bond on the market with the nominal value of 10,000 PLN. The yield to maturity for this bond is 6%. Calculate the value of a quarterly coupon paid at the beginning of the quarter by the "console" (i.e. perpetual bond) which currently cost the same as the above mentioned zero coupon bond. The rate of return ("the yield to maturity") from this console is 5.171%. What is the interest on this console if the nominal value of this console is 10,000PLN?
There is a 5 year zero coupon bond on the market with the nominal value of 10,000 PLN. The yield to maturity for this bond is 6%. Calculate the value of a quarterly coupon paid at the beginning of the quarter by the "console" (i.e. perpetual bond) which currently cost the same as the above mentioned zero coupon bond. The rate of return ("the yield to maturity") from this console is 5.171%. What is the interest on this console if the nominal value of this console is 10,000PLN?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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:
Question
Transcribed Image Text:There is a 5 year zero coupon bond on the market with the nominal value of
10,000 PLN. The yield to maturity for this bond is 6%. Calculate the value of a
quarterly coupon paid at the beginning of the quarter by the "console" (i.e.
perpetual bond) which currently cost the same as the above mentioned zero
coupon bond. The rate of return ("the yield to maturity") from this console is
5.171%. What is the interest on this console if the nominal value of this console is
10,000PLN?
A BI
II
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