Question

A $1,000 TR Global bond at 80.5 pays 6% interest. Find the interest. (Hint: Remember that a bond price of 90 on a $1,000 bond means that the bond sells for 90% of $1,000, or $900.)

Answer 1

Interest = $48.3

Explanation:

Given : A $1,000 TR Global bond at 80.5 pays 6% interest.

We have also given that a bond price of 90 on a $1,000 bond means that the bond sells for 90% of $1,000, or $900.

To find : The interest

Solution : As we have given $1,000 TR Global bond at 80.5 pays

means the actual amount of bond is given by 80.5% of $1000

80.5% of $1000 =
`(80.5)/(100)*1000=805`

The actual price is $805

Now, the interest on actual is 6%

∴ 6% of $805 =
`(6)/(100)*805=0.06*805=48.3`

Final interest = $48.3