Disney Enterprises issued 7.55% senior debentures (bonds) on July 15, 1993, with a 100-year maturity (i.e., due
Question:
a. Determine the yield to maturity (nearest 1⁄100 of 1 percent) using the valuation formula for a bond with a finite maturity.
b. Determine the yield to maturity (nearest 1⁄100 of 1 percent) using the valuation formula for a perpetual bond.
c. Explain why the answers to parts a and b are the same.
Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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a P 0 1050 M 1000 n 90 2093 2003 I 00755 1000 7550 By calculator the yield to maturity 719 b P ...View the full answer
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Related Book For 
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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