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:
J & J Manufacturing just issues a bond with a GHC100,000 face value and a coupon rate of
7%. If the bond has a life of 30 years, pays annual coupons, and the yield to maturity is
6.8%,
i) How much will the bond sell for? AP (6)
ii) Is the bond selling at a premium or a discount?
Step by step
Solved in 4 steps with 1 images
