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    Question

    A bond with a face value of ₹1,000, coupon of 10%, and

    market price ₹950 has a YTM that is:
    A Equal to 10% Correct Answer Incorrect Answer
    B Less than 10% Correct Answer Incorrect Answer
    C More than 10% Correct Answer Incorrect Answer
    D Zero Correct Answer Incorrect Answer
    E Cannot be determined Correct Answer Incorrect Answer

    Solution

    Since the bond is trading at a discount, the effective yield (YTM) is higher than the coupon rate.

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