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Debt Obligations
Linked via "coupon bond"
The baseline for determining the discount rate is typically the yield curve of risk-free government securities, such as the yield on sovereign Treasury bills. The term structure of interest rates reflects market expectations regarding future short-term rates and term risk premiums.
The standard valuation formula for a coupon bond ($B$) is:
$$B = \sum_{t=1}^{n} \frac{C}{(1 + r)^t} + \frac{FV}{(1 + r)^n…