A bond yields $100 yearly at 4 percent interest. What is the market value?
I got $1,500.
100 = 0.04x
100 / 0.04 = x
2,500 = x
To determine the market value of a bond, you need to consider the interest it yields and the interest rate applied. In this case, we know that the bond yields $100 yearly at a 4 percent interest rate.
To calculate the market value of the bond, we can use the formula for the present value of a bond. The formula is:
Market Value = Annual Interest / Interest Rate
Now let's substitute the values into the formula:
Market Value = $100 / 0.04 = $2,500
Based on this calculation, the market value of the bond is $2,500, not $1,500. Please check your calculation to ensure it was done correctly.