The Alfa Co.has a 12% bond outstanding on a $1,000 face value bond that pays interest on February 1^st and July 1^st.Today is March 1^st and you are planning to purchase one of these bonds.How much will you pay in accrued interest? A)$10 B)$20 C)$30 D)$60

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Quizplus · Accepted Answer

The bond pays interest semi-annually, so each payment is $60 (12% of $1,000 divided by 2). Since today is March 1st, one month has passed since the last interest payment on February 1st. Therefore, you will pay for one month's worth of interest, which is $60/6 = $10.