Question

Hartford Research issues bonds dated January 1 that pay interest semiannually on June 30 and December 31. The bonds have a $33,000 par value and an annual contract rate of 10%. What is the semiannual interest payment?

a) $1,650
b) $3,300
c) $6,600
d) $13,200

Answer 1

The semiannual interest payment on Hartford Research's bond with a par value of $33,000 and an annual interest rate of 10% is $1,650, which is half of the yearly interest. The correct answer is option a).

Step-by-step explanation:

The semiannual interest payment for Hartford Research's bonds with a $33,000 par value and an annual contract rate of 10% can be calculated by dividing the annual interest by two since the interest is paid semiannually.

The annual interest is found by multiplying the par value by the contract rate (33,000 × 0.10 = $3,300).

Therefore, the semiannual interest payment is $3,300 / 2, which equals $1,650.

So, the correct answer is (a) $1,650.