ued by FIFO Ltd that has a face value of $1000 and a coupon rate of 5% p.a.. The coupons are paid semi-annually and the bond has 10 years to maturity and 6.5% p.a. yield. If Ali has $9,000 to invest, calculate the price of the bon
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:
All is evaluating a bond issued by FIFO Ltd that has a face value of $1000 and a coupon rate of 5% p.a.. The coupons are paid semi-annually and the bond has 10 years to maturity and 6.5% p.a. yield. If Ali has $9,000 to invest, calculate the price of the bond (show all calculations and show answer correct to two decimal places) and explain how many bonds Ali can buy.
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