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    Question

    A debenture with ₹1,000 face value offers 10% annual

    coupon, paid semi-annually. What will be the effective annual yield?
    A 10.00% Correct Answer Incorrect Answer
    B 10.25% Correct Answer Incorrect Answer
    C 10.50% Correct Answer Incorrect Answer
    D 10.38% Correct Answer Incorrect Answer

    Solution

    Effective yield = (1 + r/2)2 – 1 = (1 + 0.05) 2 – 1 ≈ 10.25%

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