NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities
An investor buys a G-Sec with a face value of Rs 10,00,000 and a coupon of 7% per annum paid half-yearly. What coupon amount is received at each half-yearly payment?
Each half-yearly coupon is Rs 35,000. The annual coupon is 7% of Rs 10,00,000, which is Rs 70,000, and dividing this by two for the semi-annual payment frequency gives Rs 35,000.
- ARs 70,000
- BRs 35,000Correct
- CRs 3,500
- DRs 17,500
Explanation
Annual coupon = 7% of Rs 10,00,000 = Rs 70,000. Paid half-yearly, each payment is Rs 70,000 / 2 = Rs 35,000. Rs 70,000 ignores the half-yearly frequency, and Rs 17,500 wrongly assumes quarterly payments.
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