A $3,000, 7.5% bond is quoted at 97.5. How much cash will be received when the bond is issued?

Question

Quizplus · Accepted Answer

The bond is quoted at 97.5, which means the bond will be sold at a discount. Therefore, the amount of cash received will be less than the face value of the bond.

The formula to calculate the amount of cash received at issuance is:
Cash Received = Face Value x Quoted Price

Substituting the given values, we get:
Cash Received = $3,000 x 0.975 = $2,925

Therefore, the answer is choice C.