Would Bank of America or Verizon pay the most total interest on a $2000 bond at maturity? How much interest would that be?
Added by Steven D.
Step 1
- Bank of America's bond interest rate: Let's say Bank of America offers a 3% interest rate on a $2000 bond. - Verizon's bond interest rate: Let's say Verizon offers a 4% interest rate on a $2000 bond. Show more…
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Are based on the following table, which lists several corporate bonds issued during the second quarter of $2015:^{2}$ $$\begin{array}{|r|c|c|c|c|c|c|}\hline \text { Company } & \text { AT\&T } & \begin{array}{c}\text { Bankof} \\\text { America }\end{array} & \begin{array}{c}\text { General } \\\text { Electric }\end{array} &\begin{array}{c}\text { Goldman } \\\text { Sachs }\end{array} & \text { Verizon } & \begin{array}{c}\text { Wells } \\\text { Fargo }\end{array} \\\hline \begin{array}{r}\text { Time to } \\\text { Maturity } \\\text { (years) }\end{array} & 10 & 10 & 2 & 3 & 8 & 7 \\\hline \begin{array}{r}\text { Annual } \\\text {Rate }(\%)\end{array} & 3.40 & 4.00 & 5.25 & 6.15 & 5.15 & 3.50 \\\hline\end{array}$$ Which of Bank of America and Verizon would pay the most total interest on a $\$ 2,000$ bond at maturity? How much interest would that be?
The Mathematics of Finance
Simple Interest
The following table lists several corporate bonds issued during a particular quarter. Company AT&T Bank of America General Electric Goldman Sachs Verizon Wells Fargo Time to Maturity (years) 10 10 2 3 8 7 Annual Rate (%) 4.40 5.00 4.25 6.15 5.15 3.50 Would Bank of America or Verizon pay the most total interest on a $4,000 bond at maturity? How much interest would that be? Bank of America would pay $ in interest on a $4,000 bond at maturity. Verizon would pay $ in interest on a $4,000 bond at maturity. So, we see ---Select--- Bank of America Verizon would pay the most interest on $4,000 bond at maturity.
Supreeta N.
most bonds usually pay simple interest. suppose you invest $1000 in savings bond that pay simple interest of 3% per year . how much total interest will you receive in 10 years ?
Khushbu R.
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