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    Question

    A 5-year bond with face value ₹1000, coupon rate 8%

    p.a. (paid semi-annually), is trading at ₹950. What is the current yield?
    A 8.42% Correct Answer Incorrect Answer
    B 8.00% Correct Answer Incorrect Answer
    C 8.88% Correct Answer Incorrect Answer
    D 7.50% Correct Answer Incorrect Answer

    Solution

    Annual coupon = ₹1000 × 8% = ₹80. Current Yield = (Annual Coupon/Current Price)×100 = (80/950)×100 = 8.42%.

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