A company has an investment in 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1. The amount of interest accrued on December 31 (the company's year-end) would be:
A) $9,000.
B) $1,500.
C) $2,250.
D) $750.
E) $4,500.

Question

Quizplus · Accepted Answer

The interest accrues for 90 days (October 1 to December 31) and 60 days (April 1 to December 31). The total interest accrued is $9,000 x 90/360 + $9,000 x 60/360 = $2,250.

A Company Has an Investment in 9% Bonds with a Par