alleryStart learning →A 3-year bond of face Rs 1,000 pays a 10% annual coupon. At a 12% market discount rate, its value is closest to?
ARs 1,048
BRs 952
CRs 1,000
DRs 905
Answer & Solution
Correct answer: B. Rs 952
Coupons of Rs 100 discounted at 12% for 3 years give about Rs 240.18 and the Rs 1,000 redemption gives about Rs 711.78, so the value is about Rs 952.
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