Question

Marjorie purchased a county government bond with a par value of $3,000 and coupon rate of 3.42% which pays interest quarterly. What will be Marjorie’s quarterly interest payments?

Answer 1

Explanation:

To calculate Marjorie's quarterly interest payments, we need to use the formula:

Quarterly interest payment = (par value x coupon rate) / number of payments per year

Since the bond pays interest quarterly, there are four payments per year. Substituting the given values into the formula, we get:

Quarterly interest payment = ($3,000 x 3.42%) / 4

Quarterly interest payment = ($3,000 x 0.0342) / 4

Quarterly interest payment = $85.50 / 4

Quarterly interest payment = $21.375

Therefore, Marjorie's quarterly interest payments will be $21.375.