60. A $50,000 municipal bond is being sold. The interest rate is 8% with $2,000 to the bond holder every 6 months. The bond life is 10 years. At that time, the owner will receive the $50,000 back plus the last $2,000 interest payment. If your minimum interest rate is 12% compounded semiannually, what would you pay for the bond? (A) $23,520 (B) $25,630 (C) $38,530 (D) $77,160
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:
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