Target Exam

CUET

Subject

-- Applied Mathematics - Section B2

Chapter

Financial Mathematics

Question:

A Bond has a coupon rate of 10% per annum paid semi annually and the coupon payment made is ₹50, so the face value of the bond is :

Options:

₹1,000

₹500

₹2,000

₹800

Correct Answer:

₹1,000

Explanation:

$\text{Coupon rate}=10\%\text{ p.a. paid semi-annually}.$

$\text{Rate per half-year}=5\%.$

$\text{Coupon payment per half-year}=50.$

$50=0.05\times \text{Face Value}.$

$\text{Face Value}=\frac{50}{0.05}=1000.$

$\text{Face value of the bond}=₹1000.$