O’Shea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000.From this information, we know that the market rate of interest was ________.A. more than 6%B. less than 6%C. equal to 6%D. cannot be determined from the information given.
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:
O’Shea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000.
From this information, we know that the market rate of interest was ________.
A. more than 6%
B. less than 6%
C. equal to 6%
D. cannot be determined from the information given.
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