You are researching a bind with coupon payments of $90 per year and a face value of $1,000. If the yield to maturity on similar bonds is 10%, this bond should Sell at a premium. Sell for $1,000. Sell for either a premium or a discount but you can’t tell which. Sell at a discount. Sell for the same price as the similar bonds regardless of maturity.
You are researching a bind with coupon payments of $90 per year and a face value of $1,000. If the yield to maturity on similar bonds is 10%, this bond should Sell at a premium. Sell for $1,000. Sell for either a premium or a discount but you can’t tell which. Sell at a discount. Sell for the same price as the similar bonds regardless of maturity.
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
You are researching a bind with coupon payments of $90 per year and a face value of $1,000. If the yield to maturity on similar bonds is 10%, this bond should
Sell at a premium.
Sell for $1,000.
Sell for either a premium or a discount but you can’t tell which.
Sell at a discount.
Sell for the same price as the similar bonds regardless of maturity.
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