Assume you bought a $1000 par value corporation bond in 2009 for 75 1/4 with an interest rate of 7.5%. If you held the bond until maturity in 2019, what would be the total amount that you earned on this bond?

Question

Quizplus · Accepted Answer

The bond was purchased for $752.50 (75.25% of $1000). Over 10 years, it paid $75 annually in interest, totaling $750. At maturity, the bond pays $1000. Total earnings: $1000 (maturity) + $750 (interest) - $752.50 (purchase price) = $997.50.

Assume You Bought a $1000 Par Value Corporation Bond in 2009