). How is a bond’s value determined? What is the value of a 10-year, Rs.1,000 par value bond with a 10 percent annual coupon if its required return is 10 percent? (b). What is the value of a 13 percent coupon bond that is otherwise identical to the bond described in part a? Would we now have a discount or a premium bond? (c). What is the value of a 7 percent coupon bond with these characteristics? Would we now have a discount or a premium bond?
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:
a). How is a bond’s value determined? What is the value of a 10-year, Rs.1,000 par
(b). What is the value of a 13 percent coupon bond that is otherwise identical to the bond described in part a? Would we now have a discount or a premium bond?
(c). What is the value of a 7 percent coupon bond with these characteristics? Would we now have a discount or a premium bond?
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