Which security should sell at a greater price?a. A 10-year Treasury bond with a 4% coupon rate versus a 10-year T-bond with a 5% coupon.b. A 3-month expiration call option with an exercise price of $40 versus a 3 month call on the same stock with an exercise price of $35.c. A put option on a stock selling at $50, or a put option on another stock selling at $60 (all other relevant features of the stocks and options may be assumed to be identical).
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:
Which security should sell at a greater price?
a. A 10-year Treasury bond with a 4% coupon rate versus a 10-year T-bond with a 5% coupon.
b. A 3-month expiration call option with an exercise price of $40 versus a 3 month call on the same stock with an exercise price of $35.
c. A put option on a stock selling at $50, or a put option on another stock selling at $60 (all other relevant features of the stocks and options may be assumed to be identical).
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