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Perpetuity, Sinking Funds & Bonds · Question 50 of 63

What coupon does the two-year bond pay each year?

Question 50

EasyOriginal question

A bond with face value ₹1,000 pays a 9% coupon at the end of each year and is redeemed at face value in 2 years. Answers to the nearest paisa.

What coupon does the two-year bond pay each year?

Options for question 50

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. The coupon is the coupon rate times the face value.

  2. 9%×1,000=909\% \times 1{,}000 = 90 rupees.

Worth noting

₹100 uses a 10% rate; the coupon is fixed by the bond's own 9%.

Concept
The coupon payment
Typical time
90 s
Your time
—
The rule this testsValuing a bond
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