Answered

Fred Salmon purchased seven $1,000 bonds at 83. The bonds pay 6.5%.


What was the cost of the bonds?

A$7,000
B$5,810
C$830

What was the total annual interest?

A$65
B$455
C$377.65

What is the yield?

A7.8%
B7.1%
C6.5%

Verified Answer :

meerkat18

Given:
bond: 7 pcs of $1,000 @ 83
bond pays 6.5%

What was the cost of the bonds?
7 1,000 = 7,000
7,000 0.83 = 5,810 Choice B.

What was the total annual interest?
7,000 * 6.5% = 455 Choice B.

What is the yield?
6.5%

Answer:

1.) (B) 5810

2.) (B)$455

3.) (A) 7.8%

Step-by-step explanation:

1) Seven bonds of $1000 = $7000

Cost of bond AT 83% = 7000×0.83

                                    = $5810

2) Total annual interest = 6.5% × 7000

                                      = $455

3) Current yield = \(\frac{Total annual interest}{current value}\)

                           = \(\frac{455}{5810}\)

                           = 7.8%

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