Question
A bond with a face value of ₹1,000 pays an annual
coupon of 8% and matures in 5 years. If the current market yield for similar bonds is 10%, the bond is most likely trading at:Solution
When the market yield (10%) is higher than the bond's coupon rate (8%), the bond becomes less attractive. To compensate buyers, its price falls below its face value, i.e., it trades at a discount.
Which type of bond allows the holder to convert it into a specified number of equity shares?
A bond selling at a price higher than its face value is said to be selling at:
Which of these explain effective interest method for amortisation of premium/discount on bonds?
A company issues ₹10 crore worth of bonds at a coupon rate of 8% annually, while the market interest rate is 10%. The bonds are sold at a discount. Wh...
When market interest rates rise, the market price of existing bonds:
The duration of a bond is a measure of its:
A zero-coupon bond with a face value of ₹1,000 matures in 5 years. If the market yield is 8%, what is its present value? (PV factor for 5 years @ 8% i...
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 wi...
Bond face value ₹1000, coupon 10%, maturity 5 years, YTM 12%. Price = ? (PV factors: 3.605 for annuity, 0.567 for single sum)
Interest payable on the bonds is a/an _________
