NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Fixed Income Securities (NISM XXI-A)
A bond with a face value of ₹1,000 pays a 9% annual coupon and is currently trading at ₹1,000 in the market. What is its current yield?
The current yield is 9%. Current yield is the annual coupon divided by the market price, so ₹90 divided by ₹1,000 gives 9%. A bond trading at par always has a current yield equal to its coupon rate.
- A8%
- B9%Correct
- C10%
- D9.9%
Explanation
Current yield = annual coupon / market price = 90 / 1,000 = 9%. When a bond trades at par, current yield equals the coupon rate. The other options would require a price different from par.
Did you get it right without looking?
One question tells you little. A timed set on Investing in Fixed Income Securities (NISM XXI-A) shows your real accuracy, how long you take and where you lose marks.
More Investing in Fixed Income Securities (NISM XXI-A) questions
- Which of the following Indian debt instruments is issued by the Reserve Bank of India on behalf of the Government of India to meet short-ter…
- A bond with a face value of ₹1,000 and a 10% annual coupon is trading at ₹800. What is its current yield?
- A Rs 100 face value zero-coupon bond matures in 2 years and is priced to give a yield of 10% per annum with annual compounding. What is its …
- Which statement about the relationship between interest rates and bond prices is correct for a portfolio manager holding fixed income securi…
- A bond with a face value of Rs 1,000 pays an annual coupon of 9% and is currently priced at Rs 1,200. What is its current yield?
- A zero coupon bond of face value Rs 1,000 maturing in 2 years is bought at Rs 850 now. Which statement about this bond is correct?