A company has issued a bond having face value of Rs. 100,000, carrying an annual dividends at 8% and maturing in 12 years. If the prevailing market rate of interest is 9%, then annual dividend is
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Rs. 8,000
The annual dividend is paid at the bond’s own rate on its face value. The market rate (9%) affects the bond’s price, not the dividend.
\( \text{Annual dividend}=8\%\times 100000=8000 \)
So the annual dividend is Rs. 8,000.