Skip to main contentSkip to solution

A company has issued a bond having a face value of Rs. 10,000 paying annual dividends at 8.5%. The bond will be redeemed at par at the end of 10 years, then the purchase price of this bond if the investor wishes a yield rate of 8% is : [Given (1.08)−10=0.46319349(1.08)^{-10} = 0.46319349]

Solution

✅ Correct Option: 4

Annual coupon =850= 850. PV =850×1−(1.08)−100.08+10000×(1.08)−10= 850 \times \frac{1 - (1.08)^{-10}}{0.08} + 10000 \times (1.08)^{-10}

=850×0.53680.08+10000×0.4632= 850 \times \frac{0.5368}{0.08} + 10000 \times 0.4632

=5703.57+4631.93≈10335.50= 5703.57 + 4631.93 \approx 10335.50.

Keyboard Shortcuts

  • Left arrow: Previous question
  • Right arrow: Next question
  • S key: Jump to solution
  • Q key: Jump to question