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:
Corso Books has just sold a callable bond. The bond is a thirty-year semiannual bond with a coupon rate of 8%. Investors, however, can call the bond starting at the end of ten years. If the yield to call on this bond is 5% and the call requires Corso Books to pay one year of additional interest at the call (two coupon payments), what is the bond price if priced with the assumption that it will be called on the first available call date?
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