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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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