NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities
A client holds Rs 10,00,000 face value of a 7% government security with half-yearly coupons in her demat account. How much coupon will she receive on each coupon date, ignoring tax deducted?
She receives Rs 35,000 on each coupon date. The annual coupon is 7% of Rs 10,00,000, which is Rs 70,000, and because the payment is half-yearly it is split into two equal instalments. Rs 70,000 would be the full year's coupon.
- ARs 35,000Correct
- BRs 70,000
- CRs 7,000
- DRs 17,500
Explanation
Annual coupon = 7% of Rs 10,00,000 = Rs 70,000. Coupons are paid half-yearly, so each payment is Rs 70,000 / 2 = Rs 35,000. Rs 70,000 is the annual amount, which is the key distractor, and Rs 17,500 would be a quarterly amount.
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