You purchase a 8 - year bond at $ 97 per $ 100 par value that pays a 7.3 % coupon per annum . Further assume that bond pays coupon semi - annually , and coupons can be reinvested at 3.5 % semi - annually for first 6 years . The yield to maturity of a 2 - years comparable bond after 6 years is 5 % . If you hold the bond for 6 years , what will be your total return ? Please write the answer in four decimal places and not percentage.

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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: