A bond is issued with a $500 face value, a 2% yield, and a maturity of 1 year. If an investor purchases the bond at face value and holds it until the bond's maturity date, how much should the bondholder expect to receive in payment?(1 point)
Responses
$510
510 dollars
$10
10 dollars
$0
0 dollars
$500
$510
To calculate the amount the bondholder should expect to receive in payment, we need to consider the yield and the face value of the bond.
The yield of 2% means that the bondholder will receive 2% of the face value as interest annually. Since the bond has a face value of $500, the annual interest payment would be 2% of $500, which is $10.
Since the bond is held until maturity, which is 1 year in this case, the bondholder will receive the face value of $500 at the end of the year.
Therefore, the bondholder should expect to receive $500 + $10 = $510 in payment.
To calculate how much the bondholder can expect to receive in payment, you need to consider both the face value and the yield of the bond.
The face value of the bond is $500, which represents the amount that the bondholder will receive at the maturity of the bond.
The yield of the bond is 2%, which represents the annual interest rate that the bondholder will earn on the investment.
Since the bondholder is holding the bond until its maturity date, there are no coupon payments to consider. Therefore, the bondholder will only receive the face value of $500 at maturity.
So, the correct answer is $500.