Your friend Earl is starting a dog-grooming service called "Petsgroom." Because his business is new and risky, he is unable to obtain a loan from the local bank. You agree to pay a price of $7,250 for a one-year bond from Earl.
a. Calculate the face value of the bond with an interest rate of 3.4 percent.
b. Calculate the face value of the bond with an interest rate of 6.7 percent.
c. Comment on the relationship between the purchase price of the bond and the interest rate.

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The Answer of Your friend Earl is starting a dog-grooming service called "Petsgroom." Because his business is new and risky, he is unable to obtain a loan from the local bank. You agree to pay a price of $7,250 for a one-year bond from Earl.
a. Calculate the face value of the bond with an interest rate of 3.4 percent.
b. Calculate the face value of the bond with an interest rate of 6.7 percent.
c. Comment on the relationship between the purchase price of the bond and the interest rate.

Your Friend Earl Is Starting a Dog-Grooming Service Called "Petsgroom