If comparable bonds are paying 6 percent and the approximate market price of a $1,000 bond is $850,then what is the annual interest on the bond?
A)$25
B)$51
C)$60
D)$85
E)$120

Question

Quizplus · Accepted Answer

The annual interest on the bond can be found by calculating the yield, which is the interest payment divided by the market price of the bond. Since comparable bonds are paying 6 percent, the bond in question should also yield approximately 6 percent on its market price. Therefore, the annual interest is 6% of $850, which is $51.

If Comparable Bonds Are Paying 6 Percent and the Approximate