Question
A company issues a 10-year callable bond with a 9%
coupon. After 5 years, market interest rates fall to 6%. What is the most likely action the issuer will take, and why?Solution
A callable bond gives the issuer the right to repay early. If interest rates fall, the issuer can call the bond and issue new bonds at lower rates, reducing interest costs.
A certain sum of money becomes Rs. 1922 in 1 year and 2900 in 3 years at certain rate of simple interest. Find the sum of money invested.
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The difference between compound and simple interest on a sum of money for 2 years at 25% per annum is Rs. 880. The sum is:
