One of the England’s largest corporations just expanded operations into the United States. At present, the firm has a 30 year, $10,000 par value bond outstanding, with a coupon rate of 4.3% percent paid semiannually and 15 years to maturity. The yield to maturity on this bond is 5.2 percent. What is the current value of the bond? Once you have calculated the Present Value or the current price of the bond, what would be the Current Yield on this bond? Is it selling at a discount, par, or premium?
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:
One of the England’s largest corporations just expanded operations into the United States. At present, the firm has a 30 year, $10,000 par
- What is the current value of the bond?
- Once you have calculated the Present Value or the current price of the bond, what would be the Current Yield on this bond?
- Is it selling at a discount, par, or premium?
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