NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities
Mr. Iyer holds 7.10% Government security with a face value of Rs 10,00,000 that pays interest half-yearly. How much coupon will he receive on each coupon date?
He receives Rs 35,500 on each coupon date. The annual coupon is 7.10% of Rs 10,00,000, which is Rs 71,000, and because interest is paid half-yearly, this is divided into two equal payments of Rs 35,500.
- ARs 71,000
- BRs 35,500Correct
- CRs 7,100
- DRs 17,750
Explanation
Annual coupon = 7.10% of 10,00,000 = Rs 71,000. Payment is half-yearly, so each payment is 71,000/2 = Rs 35,500. Rs 71,000 ignores the half-yearly frequency, and Rs 17,750 wrongly assumes quarterly payment.
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