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CUET · MATHS · PYQ PAPER 2023

A bond of face value ₹1000 has a coupon rate 10% per annum paid semi-annually and matures in 4 years. If present value of the bond is ₹1100, then yield to maturity is:

  1. A 3.07% per annum
  2. B 9.24% per annum
  3. C 7.14% per annum
  4. D 15.8% per half year
Verified Solution

Answer & Solution

Correct Answer

(C) 7.14% per annum

Step-by-step Solution

Detailed explanation

Semi-annual coupon payment C = ₹ 1000 \(\times 0.10 / 2\) = ₹ 50 Total periods \(N = 4 \text{ years} \times 2 = 8\) Approximate semi-annual yield to maturity \(r_{sa} \approx \frac{C + (FV-PV)/N}{(FV+PV)/2}\) \(r_{sa} \approx \frac{50 + (1000-1100)/8}{(1000+1100)/2}\)…