Assume you own a bond which will mature in 9 years and has a yield to maturity which is less than its coupon rate. Your investment time horizon is one year. If your primary goal is capital gains (or avoiding capital loss) and you strongly believe that interest rates will not change over the nex year, what should you do? A) Buy more of this bond B) Continue holding this bond but sell it in one year C) Nothing D) Sell this bond now
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:
Assume you own a bond which will mature in 9 years and has a yield to maturity which is less than its coupon rate. Your investment time horizon is one year. If your primary goal is
A) Buy more of this bond
B) Continue holding this bond but sell it in one year
C) Nothing
D) Sell this bond now
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