An individualpurchaseda4-year,
$10,000 promissorynotewithaninterestrateof8.5%/
year compoundedsemiannually.Howmuchdidthe
note cost?
That would depend upon (1) when it was bought, (2) whether the accrued interest is added to the amount repaid when the note matures, (3) the credit worthiness of the debtor, (4) how the 8.5% rate compares to the Treasury note rate.
In the real world, the credit market (or the buyer and seller) would determine the value of the note described.