A $1,000 bond, which matures in one year, has a price of $952. The interest rate...

Question

Question

A $1,000 bond, which matures in one year, has a price of $952. The interest rate on this bond is ________ (whole number) %.

Answer 1

Answer #1

Answer

The interest rate for a year =(FV/PV)-1

FV=1000 and PV=952

interest rate =(1000/952)-1

=0.0504201681

=5.04%

=5% (whole number)

Answer 2

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