Sophia bought a bond when it was issued by Exxon Mobil Corporation 14 years ago. The bond, which has a $1000 face value and a coupon rate equal to 10 percent, matures In six years. Interest is paid every three months; the next Interest payment is scheduled for three months from today. If the yield on similar-risk investments is 14 percent, what is the current market value (price) of the bond? Interpret your answer.
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:
Sophia bought a bond when it was issued by Exxon Mobil Corporation 14 years ago. The bond, which has a $1000 face value and a coupon rate equal to 10 percent, matures In six years. Interest is paid every three months; the next Interest payment is scheduled for three months from today. If the yield on similar-risk investments is 14 percent, what is the current market value (price) of the bond? Interpret your answer.
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