Question

Nancy Groom owns one $1,000 corporate bond issued by General Motors. The bond pays 8.5 percent. If interest is paid semiannually, what is the amount of the check that Ms. Groom will receive at the end of each six-month period.

Answer 1

Answer:

$42.50

Explanation:

The computation of the amount received at the end of each six month period is shown below:

= Issued amount × rate of interest × number of months ÷ total number of months in a year

= $1,000 × 8.5% × 6 months ÷  12 months

= $42.50

By multiplying the issued amount with the rate of interest and the number of months we can get the amount of the check and the same is shown above