B plc has £100,000 5% debentures in issue. Interest is paid annually on
31 December. The ex-interest market value of the stock on 1 January 2008 is 90% and the stock is redeemable at a 10% premium 0n 31 December 2012. The company pays corporation tax at 30%.
Why is the ex-interest market value of the stock quoted at 90% what does this means.
Does paying interest mean that the company saves because they would be taxes on profits??
Redeemable at a 10% premium? so they are paying to pay back the debenture?
Any help much appreciated.