If a bond sells for $2,000 and pays $200 per year in interest, the interest rate on the bond is

Question

Quizplus · Accepted Answer

To calculate the interest rate, we need to divide the annual interest payment by the bond's selling price and multiply by 100 to get a percentage:

Interest rate = (Annual interest payment / Bond selling price) x 100%

Interest rate = ($200 / $2,000) x 100%
Interest rate = 0.10 x 100%
Interest rate = 10%

Therefore, the interest rate on the bond is 10 percent, which is option B.

If a Bond Sells for $2,000 and Pays $200 Per