A bond with a face value of P1,000 matures in 12 years and has a 10% percent annual coupon. it can be called in 5 years at a price of P950. What is the bond's yield to call if today the bond is selling at P800? *

A bond with a face value of P1,000 matures in 12 years and has a 10% percent annual coupon. it can be called in 5 years at a price of P950. What is the bond's yield to call if today the bond is selling at P800? *

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...

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Concept explainers

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:

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A bond with a face value of P1,000 matures in
12 years and has a 10% percent annual
coupon. it can be called in 5 years at a price
of P950. What is the bond's yield to call if
today the bond is selling at P800? *

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