Juanita is considering the purchase of 7 bonds. What is the annual interest for the bonds when the settlement date is on the interest date?
Face value of each bond: $525
Price per bond: 78.75%
Interest rate: 8.35%
Commission per $1,800 bond: $18

Question

Quizplus · Accepted Answer

First, we need to calculate the price of each bond:

Price per bond = 78.75% x $525 = $413.44

Next, we need to calculate the commission per bond:

Commission per bond = ($18/$1800) x $525 = $5.25

So the total cost per bond is:

Total cost per bond = $413.44 + $5.25 = $418.69

Now we can calculate the annual interest per bond:

Annual interest per bond = 8.35% x $525 = $43.84

Finally, we can calculate the total annual interest for all 7 bonds:

Total annual interest = 7 x $43.84 = $306.86

Therefore, the best choice is C, with a total annual interest of $306.86.

Juanita Is Considering the Purchase of 7 Bonds