A bond's price is $80 and the bond pays $8 in interest every year.The bond's interest rate is ________.
A) 8 percent
B) 10 percent
C) 4 percent
D) 80 percent
E) None of the above are correct.

Question

Quizplus · Accepted Answer

The bond's interest rate can be calculated by dividing the annual interest payment by the bond price and multiplying by 100 to convert to a percentage. 
(i.e. $8/$80 x 100 = 10%). Therefore, the bond's interest rate is 10 percent, which is option B.

A Bond's Price Is $80 and the Bond Pays $8