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Corporate Finance · Quiz 1 · 15 Mar 2026 · January 2026 term

Question 18: Consider a 10-year zero-coupon bond that promises to pay…

Question 18

+4 marksOne correct option

Consider a 10-year zero-coupon bond that promises to pay 1000 units after 10 years. The annualized interest rate is 5%. Suppose due to rising uncertainty, the prevailing interest rate increases by 20 basis points to 5.2%. What would be the impact on the value of the bond?

  1. A

    Increases by 2.88%

  2. B

    Decreases by 2.88%

  3. C

    Increases by 1.88%

  4. D

    Decreases by 1.88%

Show answer

Correct answer

  • D

    Decreases by 1.88%

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Question 18 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 1 paper sat on 15 Mar 2026, in the January 2026 term (Corporate Finance 15 Mar 26). It carries 4 marks.

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