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Lisa [10]
3 years ago
13

If a one-year bond has a face value of $5,000 and is sold for $4,500, what is the interest rate on the bond?

Business
1 answer:
Arada [10]3 years ago
6 0

Answer:

11.1%

Explanation:

The face value is $5000

It is sold for $4,500

Therefore the interest rate of this bond can be calculated as follows

$5000-$4500

= 500

500/4500 × 100

= 0.111 × 100

= 11.1%

Hence the interest rate is 11.1%

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