Jackie K.

# stocks and bond

Abby Sane decided to buy corporate bonds instead of stock. She desired to have the fixed-interest payments. She purchased 9 bonds of Meg Corporation 11 3/4  % at 90.00. As the stockbroker for Abby (assume you charge her a $9 commission per bond). a) Calculate the total cost of the purchase. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Total cost $= (b) Calculate the total annual interest to be received. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Total annual interest $= (c) Calculate the current yield. (Round your answer to the nearest tenth percent. Omit the "%" sign in your response.) Current yield %= ## 1 Expert Answer By: Scott T. answered • 10/17/12 Tutor 5 (1) Math and Science Tutoring from an MIT Masters in Engineering Jackie K. HI, MR. SCOTT I HAVE CORRECTED THE WORD PROBLEM AND THANK YOU FOR YOUR HELP Report 10/17/12 Scott T. Hi Jackie, I wonder if the 11.75% is the coupon rate for your bond? Do you see anything that references a "face value" or "clean price" for the bond? It seems like this is more of a finance question than a math question, but we should be able to get to the bottom of it. Report 10/17/12 Jackie K. YES THE FACE VALUE IS 1000 IM SO SORRY I FORGOT TO ADD Report 10/17/12 Scott T. Hi Jackie, The face value of$1000 makes sense, but then I'm wondering if the price is $90.00. This would be pretty unusual! Are you sure the price is$90.00?

Also, that 11.75% number, does the problem say that this is a coupon rate?

Thanks!

Scott

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10/17/12

Jackie K.

NO IT DOES NOT
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10/17/12

Jackie K.

thank you sooo much i understand now .... I do I rate you Im a newbie
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10/17/12

Scott T.

Glad I could help - I think you have a chance to click the Thumbs Up, and maybe because you asked the question you can also choose the best answer.  I'm actually not sure myself because I just discovered this whole question/answer thing too !

Cheers~

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10/17/12

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