Match List-I with List-II
| List-I | List-II | ||
| (A) | It is the amount the bond issuer pays at maturity. | (I) | Coupon rate |
| (B) | It is the rate at which a bond yield interest. | (II) | Face value |
| (C) | It is the annual interest rate paid by the bond issuer to the bond holder. | (III) | Nominal rate of interest |
| (D) | The price at which the bond is sold to buyers at the time of issue. | (IV) | Redemption price |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A) - (IV), (B) - (III), (C) - (I), (D) - (II)
(A) It is the amount the bond issuer pays at maturity.
This matches (IV) Redemption price. The redemption price is what the issuer pays back when the bond matures.
(B) It is the rate at which a bond yield interest.
This matches (III) Nominal rate of interest. The nominal rate is the stated rate at which the bond earns interest.
(C) It is the annual interest rate paid by the bond issuer to the bond holder.
This matches (I) Coupon rate. The coupon rate, applied to the face value, gives the yearly interest (coupon) paid to the holder.
(D) The price at which the bond is sold to buyers at the time of issue.
This matches (II) Face value. The face (par) value is the price printed on the bond at which it is issued.
So the matching is (A)-(IV), (B)-(III), (C)-(I), (D)-(II).
Note: Some List-I items fit more than one List-II entry. The coupon rate of a bond is also called its nominal rate of interest, so (B) and (C) each fit both (I) and (III). The question can still be solved because (A) and (D) have only one possible match each, (A)-(IV) and (D)-(II), and Option (1) is the only option containing them.
CBSE Applied Mathematics (Class XII):
Valuation of Bonds
