What is the nominal rate of return on an Ayala Inc.. bond if the real rate of interest is 3 percent, the inflation risk premium is 2 percent, the Philippine T-bill rate is 5 percent, the maturity risk premium on the Ayala Inc. bond is 3 percent, the default risk premium on the Ayala Inc. bond is 2 percent, and the liquidity risk premium on the bond is 1.25 percent?
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:
What is the nominal
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