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Perpetuity, Sinking Funds & Bonds · Question 38 of 63

What coupon does the investor receive on the ₹500 bond?

Question 38

EasyOriginal question

An investor buys a bond of face value ₹500 with an 8% annual coupon for ₹480, one year before it is redeemed at face value.

What coupon does the investor receive on the ₹500 bond?

Options for question 38

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. The coupon is worked out on the face value, not the price paid.

  2. 8%×500=408\% \times 500 = 40 rupees.

Worth noting

₹38.40 takes 8% of the ₹480 paid.

Concept
The coupon is on the face value
Typical time
90 s
Your time
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The rule this testsBonds and their terms
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