Question

Paulette Woods purchased a $20,000 bond at 95.25. The bond has an annual interest rate of 7.5%. Find the annual yield to the nearest whole percent.

6%

7%

8%

9%

None of these choices are correct.

Answer 1

Answer: The annual yield to the nearest whole percent is 8%

Explanation:

The interest rate of 7.5%:( 7.5/100) ×20000

= $ 1500

$20000 = 95.25

$1500. = ×

Cross multiple

1500 × 95.25 = 20000 x

X= 7.14375

The percent= (7.14375/95.25) × 100

= 7.5%

= 8%

Answer 2

Answer: 8%

Step-by-step explanation: Annual yield is the interest rate earned on an investment annually.

APY = (1+r/n)^n - 1

=(1+0.075/12)^12 - 1

=(1+0.00625)^12 - 1

=(1.00625)^12 - 1

=1.0776325988-1

0.0776325988 * 100

=7.76

=8%