Skip to main contentSkip to solution

A company has issued a bond of face value ₹ 90,000 carrying an annual dividend of 7% and maturing in 15 years. If the prevailing market rate of interest is 9% , the value of bond redeemed at par is: (given (1.09)−15≈0.3(1.09)^{-15} \approx 0.3)

Solution

✅ Correct Option: 4

Annual coupon =0.07×90000=6300=0.07\times 90000=6300.

Present value of coupons =6300×1−0.30.09=49000=6300\times\dfrac{1-0.3}{0.09}=49000.

Present value of redemption =90000×0.3=27000=90000\times 0.3=27000.

Bond value =49000+27000=₹ 76000=49000+27000=₹\,76000.

Keyboard Shortcuts

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