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Reika [66]
3 years ago
11

An investor pays $900 for a bond with a principal value of $1,000 and a coupon rate of 8%. How much in annual interest will the

investor receive on this investment?
Business
1 answer:
solmaris [256]3 years ago
5 0

Answer:

Annual Interest = $80

Interest rate = 8.89%

Explanation:

The investor pays discounted price for this bond.

We know, Annual Interest = Coupon payment/Market value

Given,

Coupon payment = Principal value*Coupon rate

Coupon payment = $1,000*8% = $80

Market value = Price pays for the bond = $900

Therefore, the annual interest rate = $80/$900

Annual Interest rate = 8.89%

Note that, coupon payment is the annual interest rate.

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Answer:

$6,300

Explanation:

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Andru [333]

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BlackZzzverrR [31]
The appropriate action would be: C. <span>Thank the taxpayer, and explain that you cannot accept any payment for your services.
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Answer:

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