Lee buys a bond for $10,000 and receives interest payments of $400 every six months.The interest rate on the bond is approximately:

Question

Quizplus · Accepted Answer

The bond pays $400 every six months, which means it pays $800 per year.

To find the interest rate, we need to divide the annual interest by the principal amount:

$800 / $10,000 = 0.08

So the interest rate is 8 percent, which corresponds to choice (B).

Lee Buys a Bond for $10,000 and Receives Interest Payments