A bond has ₹3,500 as its par value, redeemable at 7\% at the end of 8 years. What will be the present value of the bond if the annual yield rate is 8\ - Mathematics MCQ Mathematics Mock Test - 8 2026 | ExamTest.live

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A bond has ₹3, 500 as its par value, redeemable at 7% at the end of 8 years. What will be the present value of the bond if the annual yield rate is 8% ? Take (1.08)^{- 8} = 0.54 and \frac{1 - ( 1.08 ) ^{- 8}}{0.08} = 5.75 .

Solution & Step-by-step Explanation

Present Value of Bond (V) = C \cdot [\frac{1 - ( 1 + i ) ^{- n}}{i}] + F \cdot (1 + i)^{- n} Where: F (Face/Par Value) = 3, 500 r (Coupon Rate) = 7% = 0.07 C (Annual Coupon Payment) = F \times r = 3, 500 \times 0.07 = 245 i (Yield Rate) = 8% = 0.08 n = 8 yearsSubstituting values: V = 245 \times (5.75) + 3, 500 \times (0.54) V = 1408.75 + 1890 = 3298.75

Try it yourself before checking the explanation above.

A bond has ₹3, 500 as its par value, redeemable at 7% at the end of 8 years. What will be the present value of the bond if the annual yield rate is 8% ? Take (1.08)^{- 8} = 0.54 and \frac{1 - ( 1.08 ) ^{- 8}}{0.08} = 5.75 .

3, 500

3310.23

3625.97

3298.75

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