You observe two most recently issued securities: 6-month T-Bill (zero coupon) with yield 5.25% p.a., and 2-year T-Note with coupon rate of 6% p.a. are selling at par of 100. All bonds in the market are semi-annual payments. Using this information to answer questions 19-20. Which of the following information would be incorrect? A. The current 6-month spot rate is 5.25% p.a. B. The yield to maturity of 2-year T-note is 6% p.a. C. The correct market price of 1-year Treasury note with par of 100 and coupon rate of 5.5% should be about 100. D. The spot rate in 1.5-year’s time should be 5.75% p.a.
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:
You observe two most recently issued securities: 6-month T-Bill (zero coupon) with yield 5.25% p.a., and 2-year T-Note with coupon rate of 6% p.a. are selling at par of 100. All bonds in the market are semi-annual payments. Using this information to answer questions 19-20.
Which of the following information would be incorrect?
A. The current 6-month spot rate is 5.25% p.a.
B. The yield to maturity of 2-year T-note is 6% p.a.
C. The correct market price of 1-year Treasury note with par of 100 and coupon rate of 5.5% should be about 100.
D. The spot rate in 1.5-year’s time should be 5.75% p.a.
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