Question

Jim buys a 5 percent bond in the amount of $100. If the market interest rate increases to 10 percent Jim can sell his bond for up to:

Answer 1

$50

Step-by-step explanation:

Jim buys a 5% bond

The amount is $100

The market interest rate increases to 10%

Therefore the price at which the bond cann be sold is calculated as follows

= 5×100

= 500×0.01

= 50

Hence it can be sold for $50