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:
The Yield To Maturity (YTM) is one one the method used to find out the price of bond. It gives the measure about the return from bonds. The return that the bond held at the time of maturity is the Yield To Maturity. It contains the total income earned by the investor over the of the security. The total income consist of coupon income, capital gains or losses and interest on coupon rate.
It can be calculated using the following equation:
Where,
C = Periodic coupon payments or Cash flow
F = The face value of the bond received
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