Compute yield-to-maturity for the following zero-coupon bonds: 1-year zero-coupon bond, traded currently at 980 dollars 2-years zero-coupon bond, traded currently at 920 dollars 3-years zero-coupon bond, traded currently at 840 dollars Assume that all 3 bonds have the same nominal: 1000 dollars. Using YTMs calculated plot the yield curve.
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:
Compute yield-to-maturity for the following zero-coupon bonds:
- 1-year zero-coupon bond, traded currently at 980 dollars
- 2-years zero-coupon bond, traded currently at 920 dollars
- 3-years zero-coupon bond, traded currently at 840 dollars
Assume that all 3 bonds have the same nominal: 1000 dollars.
Using YTMs calculated plot the yield curve.
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