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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:
A mortgage bond issued by Automation Engineering is for sale for $8200. The bond has a face value of $10,000 with a coupon rate of 8% every six months, payable annually. What
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- A mortgage bond issued by Automation Engineering is for sale for $8,900. The bond has a face value of $10,000 with a coupon rate of 5% per year, payable annually. What rate of return will be realized if the purchaser holds the bond to maturity 9 years from now? The rate of return will be % per year.A mortgage bond issued by Automation Engineering is for sale for $7,700. The bond has a face value of $10,000 with a coupon rate of 6% per year, payable semi-annually. What rate of return will be realized if the purchaser holds the bond to maturity 6 years from now? The rate of return will be % per year.A mortgage bond issued by Automation Engineering is for sale for $8,800. The bond has a face value of $10,000 with a coupon rate of 7% per year, payable monthly. What rate of return will be realized if the purchaser holds the bond to maturity 10 years from now? The rate of return will be % per year.
- A mortgage bond issued by Automation Engineering is for sale for $8,700. The bond has a face value of $10,000 with a coupon rate of 7% per year, payable quarterly. What rate of return will be realized if the purchaser holds the bond to maturity 8 years from now?A mortgage bond issued by Automation Engineering is for sale for $8,700. The bond has a face value of $10,000 with a coupon rate of 7% per year, payable quarterly. What rate of return will be realized if the purchaser holds the bond to maturity 8 years from now? The rate of return will be % per year.A mortgage bond issued by Automation Engineering is for sale for$8,900. The bond has a face value of$10,000 with a coupon rate of 10%per year, payable monthly. What rate of return will be realized if the purchaser holds the bond to maturity 10 years from now? The rate of return will be......%per year.
- A bond with a face value of $10,000 pays interest of 4% per year. This bond will be redeemed at its face value at the end of 10 years. How much should be paid now for this bond when the first interest payment is payable one year from now and a 5% yield is desired?A bond with a face value of $11,000 pays interest of 3% per year. This bond will be redeemed at par value at the end of its 13-year life, and the first interest payment is due one year from now. If you want a 10% return rate, what is the highest price that you'd be willing to pay for the bond?"You buy a bond that pays annual interest payments of 7% of the bond’s face value of $1000. You initially pay $950 for the bond. You receive an annual interest payment after one year, then sell the bond for $880. What is your total rate of return on the investment, expressed as a percentage of the purchase price?
- A bond with a face value of $5,000 pays interest of 8% per year. This bond will be redeemed at par value at the end of its 20-year life, and the first interest payment is due one year from now. Solve, (a) How much should be paid now for this bond in order to receive a yield of 10% per year on the investment? (b) If this bond is purchased now for $4,600, what annual yield would the buyer receive?You have an opportunity to purchase a bond that will pay out $815 in 10 months. If you would like to earn at least a 2.2% annual rate of simple interest on your investment, what is the largest amount the you should pay for the bond? Round your answer to the nearest cent.A corporate bond has a face value of $1000 with maturity date 10 years from today. The bond pays 2% interest every 6 months. If you want an annual rate of return of 10%/yr, how much are you willing to pay for the bond today?