A 4.40 percent coupon municipal bond has 16 years left to maturity and has a price quote of 105.50. The bond can be called in eight years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5,000.) Compute the bond’s current yield. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Compute the yield to maturity. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). (Do not round intermediate calculations. Round your answer to 2 decimal places.) Compute the yield to call. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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 4.40 percent coupon municipal bond has 16 years left to maturity and has a price quote of 105.50. The bond can be called in eight years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5,000.)
Compute the bond’s current yield. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Compute the yield to maturity. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Compute the yield to call. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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