Nancy Groom owns a $1,000 corporate bond that pays 8.5 percent. What is the amount of each interest payment?

Question

Quizplus · Accepted Answer

To find the amount of each interest payment, we need to multiply the bond's face value ($1,000) by the bond's annual interest rate (8.5%) and then divide by the number of interest payments per year. Since the question does not specify the frequency of interest payments, we can assume annual payments, which means there is only one interest payment per year. Therefore, the amount of each interest payment is:
($1,000 x 8.5%) / 1 = $85 / 2 = $42.50 (since the bond pays interest twice a year)

Nancy Groom Owns a $1,000 Corporate Bond That Pays 8