Calculate the Modified Duration of the following securities: 10 % semi-annual coupon maturating in 5 years trading at a yield of 8 % 6% annual coupon maturating in 9 years trading at a yield of 8 % Also, please explain what is convexity as it applies to one of the above securities
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:
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