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Nancy Kelge purchases 44 bonds that mature in 2024 at 96.2. They have a coupon rate of 7.375%. Commissions are $10 per bond. Find the effective interest rate rounded to the nearest tenth.
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Nancy Kelge purchases 44 bonds that mature in 2024 at 96.2.

They have a coupon rate of 7.375%.

Commissions are $10 per bond.

Find the effective interest rate rounded to the nearest tenth.

User QWERTYL
by
8.0k points

1 Answer

4 votes
:)

The effective interest rate is

((1+0.07375÷12)^(12)−1)×100
=7.6%

Hope it helps
User Radiaph
by
8.4k points
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