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A bond with four to five years to run is discounted by:
A20 per cent
B60 per cent
C80 per cent
D40 per cent
Answer & Solution
Correct answer: A. 20 per cent
1. The discount begins five years before maturity.
2. The first step is the smallest.
3. That step is 20 per cent.
_Source: RBI Master Circular, Prudential Norms on Capital Adequacy, Primary (Urban) Co-operative Banks_
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