Question

3 A woman has purchased $150,000 worth of corporate bonds. The bonds expire in 20 years,
and simple interest is computed semiannually at a rate of 7 percent per 6-month period.
Interest checks are mailed to bondholders every 6 months. Determine the interest the
woman can expect to earn every 6 months. How much irterest can she expect over the
20-year period?​

Answer 1

Answer:

420000 is the amount of interest she can expect over 20 years period.

Step-by-step explanation:

A bond is a debt obligation, like an Iou. Investors who buy corporate bonds are lending money to the company issuing the bond. In return, the company makes a legal commitment to pay interest on the principal and, in most cases, to return the principal when the bond comes due, or matures. Corporate bonds make up one of the largest components of the u.s. bond market, which is considered the largest securities market in the world. other components include us' treasury bonds, other u.s. government bonds, and municipal bonds.

Given-

Rate of interest 7 % semi annually

After 6 months the interest received will be 7%*150000=10500

Annualy interest received =10500*2=21000

Therefore after 20 years total interest received will be 21000*20=420000

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