At Westonci.ca, we connect you with the answers you need, thanks to our active and informed community. Discover solutions to your questions from experienced professionals across multiple fields on our comprehensive Q&A platform. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.
Sagot :
The comparable bonds pay a 5% interest rate when the approximate market value of a $1,000 corporate bond is $1,200 and it pays 6 percent interest.
What are bonds?
A bond is a type of financial security in which the issuer owes the holder debt and is obligated depending on the terms to repay the principal of the bond as well as interest over a specified period of time.
Given that,
Approximate market value of $1,000 is $1,200
Interest rate is 6%
[tex]\rm\,Annual \; Interest = (face \; value)\times Interest \; rate\\ \rm\,Annual \;Interest = 1,000 \times 6\%\\ \rm\,Annual \;Interest = 60\\\\Calculation of comparable bond interest rate:\\\\Approximate \;bond \;value = \frac{Annual\; interest}{Comparable \;interest\; rate} \\\\1200 =\frac{60}{Comparable\; Interest \;Rate} \\\\Comparable\; Interest\; Rate = 5\%[/tex]
Hence, the comparable bonds pay a 5% interest rate.
To learn more about Bonds, refer:
https://brainly.com/question/25965295
#SPJ1
Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Get the answers you need at Westonci.ca. Stay informed by returning for our latest expert advice.
