Question

Jared has purchased a corporate bond with a face value of $10,000. He receives interest in the amount of $300 every six months. What is the interest rate of the bond?

a. 3%
b. 5%
c.4%
d. 6%

Answer 1

The annual interest rate of the bond Jared purchased with a face value of $10,000, which pays $300 in interest every six months, is 6%. Therefore correct option is D

Step-by-step explanation:

Jared has purchased a corporate bond with a face value of $10,000. He receives interest in the amount of $300 every six months.

To find the annual interest rate, we can first determine the total interest paid in one year, which would be $300 every six months, so $300 × 2 = $600 per year.

Now, to calculate the interest rate, use the formula: Interest Rate = (Total Annual Interest / Face Value) × 100. Therefore, the interest rate is: ($600 / $10,000) × 100 = 6%.