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yan [13]
2 years ago
6

David purchased a $5,000 bond on the secondary market. He paid a $500 premium. What is David's basis?

Business
1 answer:
Pavel [41]2 years ago
5 0

Answer:

David's basis on the $5,000 bond purchased is:

C. $5,000.

Explanation:

a) Data and Analysis:

Cost of Investment in bond = $5,000

Premium paid = $500

b) David's basis on the bond is the quoted price of the bond, which is a security investment.  It is on this basis price that future interest will be calculated.  The additional $500 as premium he paid is just an additional cost which he incurred in exchange for his interest in the bond.  It does not form part of the basis.

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Answer:

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8 0
3 years ago
Read 2 more answers
Judith puts $5000 into an investment account with interest compounded continuously. which approximate annual rate is needed for
Oxana [17]
In the question, continuously should be annually.

Solution:
Applicable formula is;
A = P(1+r)^n

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r = Annual interest rate in decimals
n = Number of years = 30

Substituting;
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ln (1.822) = 30 ln (1+r)
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Therefore, annual interest rate should be 2.02%.
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