A fixed-interest security bears interest of 10% per annum payable half-yearly in arrear. The security will be redeemed at 105% by five instalments, of equal nominal amount, on 31 July in each of the...

Extracted text: A fixed-interest security bears interest of 10% per annum payable half-yearly in arrear. The security will be redeemed at 105% by five instalments, of equal nominal amount, on 31 July in each of the years 2016 to 2020 inclusive. An investor, who is liable to income tax at the rate of 40%, purchased the entire security on 31 July 2006, immediately following the interest payment then due, at a priceto obtain a net yield of 9% per annum effective. The annual coupon rate per unit is Select one: O a. 7.14% b. 11.6% c. 12.4% d. 10% e. 9.52%


Extracted text: For optional redemption dates securities, maturity date is pre- identified by the issuer and but not declared to the investor. In which, the security is redeemed at any interest date or between two specified dates, or at any interest date on or after a specified date. Select one: a. True b. False