A bond is not characterized by which of the following terms?
(A) Face value
(B) Coupon rate
(C) Redemption price
(D) Equated monthly installment.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (D) only
A bond is described by its face value (the amount printed on it), its coupon rate (the interest rate paid on the face value) and its redemption price (the amount paid back at maturity). An equated monthly installment belongs to the repayment of a loan, not to a bond.
So face value, coupon rate and redemption price characterize a bond, and only the EMI does not.
Each term below is marked by whether it characterizes a bond; the answer is the term that does not, so it is the one marked Incorrect.
Checking the statements
(A) Face value — Correct. Every bond has a face value, so it characterizes a bond.
(B) Coupon rate — Correct. The coupon rate fixes the interest a bond pays, so it characterizes a bond.
(C) Redemption price — Correct. The redemption price is paid when the bond matures, so it characterizes a bond.
(D) Equated monthly installment. — Incorrect. An EMI is the repayment of a loan, so it does not characterize a bond.
CBSE Applied Mathematics (Class XII):
Valuation of Bonds
