Solve the problem.
-Joe Simpson bought 37 Woodward Corp. (WDW)bonds maturing 2010. According to a bond table, the last price is 87.250 and the coupon rate is 10.250. Assuming a sales commission of $1 per bond, find the effective interest rate using total cost including commissions.

Question

Quizplus · Accepted Answer

The effective interest rate is calculated by considering the coupon payment and the total cost including commissions. The coupon payment is 10.250% of the face value (usually $1000), and the total cost per bond is 87.250% of the face value plus $1 commission. The effective interest rate is the coupon payment divided by the total cost, which is approximately 11.7%.

Solve the Problem. -Joe Simpson Bought 37 Woodward Corp. (WDW)bonds Maturing 2010. According