Another bond was issued on 6/1/2018 and has a 4% coupon rate, with interest paid semi-annually, and a maturity value of $1,000, and matures on 6/1/2043. However, it is callable after 6/1/2023 with a call premium of 7.5%. If the bond is currently priced to yield 3.75%, what is the bond's yield to call if you bought it on 3/1/2022?
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:
Another bond was issued on 6/1/2018 and has a 4% coupon rate, with
interest paid semi-annually, and a maturity value of $1,000, and matures on 6/1/2043.
However, it is callable after 6/1/2023 with a call premium of 7.5%. If the bond is
currently priced to yield 3.75%, what is the bond's yield to call if you bought it on
3/1/2022?
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