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Find the purchase price of a ` 1000 bond redeemable at the paying annual dividends at 4% if the yield
rate is to be 5% effective.?
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Find the purchase price of a ` 1000 bond redeemable at the paying annu...
Purchase Price Calculation for a Bond


  1. Given Data:
    • Face value of the bond (FV) = `1000
    • Dividend rate = 4%
    • Yield rate = 5%




  2. Calculation of Annual Dividend:
    Dividend = FV * Dividend rate = `1000 * 4% = `40


  3. Calculation of Purchase Price using Yield Rate:
    Purchase Price = Dividend / Yield Rate = `40 / 5% = `800


  4. Explanation:
    When the yield rate is higher than the dividend rate, the bond will be sold at a discount to make it attractive to investors. In this case, the purchase price of the `1000 bond with a 4% dividend rate is `800 when the yield rate is 5%.

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Find the purchase price of a ` 1000 bond redeemable at the paying annual dividends at 4% if the yield rate is to be 5% effective.?
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Find the purchase price of a ` 1000 bond redeemable at the paying annual dividends at 4% if the yield rate is to be 5% effective.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Find the purchase price of a ` 1000 bond redeemable at the paying annual dividends at 4% if the yield rate is to be 5% effective.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Find the purchase price of a ` 1000 bond redeemable at the paying annual dividends at 4% if the yield rate is to be 5% effective.?.
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