A $7,000 bond that carries a 4.00% coupon rate payable semi-annually is purchased 8 years before maturity when the yield rate was 5.00% compounded semi-annually. a. Calculate the purchase price of the bond. $ Round to the nearest cent b. What is the amount of discount or premium on the bond? (click to select)Premium OR Discount OR Par amount is Round to the nearest cent -( ) Please answer both a and b
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 $7,000 bond that carries a 4.00% coupon rate payable semi-annually is purchased 8 years before maturity when the yield rate was 5.00% compounded semi-annually.
a. Calculate the purchase price of the bond.
$
Round to the nearest cent
b. What is the amount of discount or premium on the bond?
(click to select)Premium OR Discount OR Par
amount is
Round to the nearest cent -( )
Please answer both a and b
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