John Hendrix purchased a $5,000 bond at 120. The bond pays 7%. What was the cost of the bond? $ What was the annual interest? $ What is the yield (to the nearest tenth of a percent)? %
Option 1:
A) Cost of the bond = $120
B) Annual interest = $500
C) Yield = 7.5%
Option 2:
A) Cost of the bond = $600
B) Annual interest = $350
C) Yield = 5.8%
Option 3:
A) Cost of the bond = $4,000
B) Annual interest = $280
C) Yield = 7.0%
Option 4 (Correct Option):
A) Cost of the bond = $6,000
B) Annual interest = $350
C) Yield = 5.8%