Question

A customer buys 10 Allied Corporation 8% debentures, M '25, at 90 on Tuesday, Oct 9th. The interest payment dates are Feb. 1 and Aug. 1. The trade settled on Thursday, October 11th. The annual interest payments amount to:

Answer 1

Based on the information given the annual interest payments amount to:$800.

Annual interest payments:

The 10M represent 1-1,000 bonds which is $10,000

Using this formula

Annual interest payment= Interest rate annually×Bonds

Where:

Interest rate annually=8%

Bonds=$10,000

Let plug in the formula

Annual interest payment=8% of $10,000

Annual interest payment=$800

Inconclusion the annual interest payments amount to:$800.

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