Determining Interest and Approximate Bond Value. Eight years ago, Burt Brownlee purchased a government bond that pays
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Determining Interest and Approximate Bond Value. Eight years ago, Burt Brownlee purchased a government bond that pays 4.70 percent interest. The face value of the bond was $1,000.
a. What is the dollar amount of annual interest that Burt received from his bond investment each year?
b. Assume that comparable bonds are now paying 4.00 percent. What is the approximate dollar price for which Burt could sell his bond?
c. In your own words, explain why Burt’s bond increased or decreased in value.
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