A bond has a $1,000 par value, 15 years to maturity, and an 8% annual coupon and sells for $1,080. 1. What is its yield to maturity (YTM)? Round your answer to two decimal places. 2.Assume that the yield to maturity remains constant for the next five years. What will the price be 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.
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 bond has a $1,000 par value, 15 years to maturity, and an 8% annual coupon and sells for $1,080.
1. What is its yield to maturity (YTM)? Round your answer to two decimal places.
2.Assume that the yield to maturity remains constant for the next five years. What will the price be 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.
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