Question

7. XYZ buys 200 Debentures of nominal value of 3 100 each of ICICI Ltd. at 98 (ex-interest) on
1-3-2012 from ABC. Interest @ 12% p.a. is to be paid half-yearly on 30th June and 31st December
(a) Nominal value of investment purchased is * 20,000
(b) Nominal value of investment purchased is * 19,600
(c) Nominal value of investment purchased is 20,200
(d) Nominal value of investment purchased is 19,800

Answer 1

Answer:

Explanation:

20200

Answer 2

The correct answer to this question is option (a) Nominal value of investment purchased is 20,000.

Explanation:

• Nominal value investment of security, often denoted to as par or face value, is its recovery price and is generally stated on the frontage of that security.

• For bonds, the nominal value is the face value and will alter from its market value depending on market interest rates.

• A preferred stock's nominal (par) value is significant in that it is used to compute its dividend while the nominal value of the common stock is a random value allotted for balance sheet purposes.