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Tutorial Exercise The following table lists several corporate bonds issued during the second quarter of 2015. 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 (%) 3.40 4.00 5.25 6.15 5.15 3.50 If you spent $60,000 on Verizon bonds, how much interest would you earn every 6 months, and how much interest would you earn over the life of the bonds? HINT (See Example 3.] Step 1 Recall that the simple interest INT on an investment of PV (present value) dollars at an interest rate of i per period for n periods is INT = PVin. 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 (%) 3.40 4.00 5.25 6.15 5.15 3.50 Given that $60,000 is spent on Verizon bonds, PV = 5.15 X According to the information in the table for Verizon, the time to maturity, or life of the bond, is 8 years. Recall that the interest rate must be converted to decimal form before using the formula. Therefore, 5.15% gives an annual interest rate of i = The following chart shows monthly figures for Apple stock in 2010.7 350 A 317.13 317.44 300 294.07 255.96 260.09 250 235.97 258.77 246.94 235.86 211.98 218.95 200 + 195.46 150 100 x x x x Apr-10 Mar 10 Feb-10 i Sep-10 Aug-10 01-120 Nov-10 Dee-101 Jan-10 Jul-10 May-10 Marked are the following points on the chart. Jan. 10 Feb. 10 Mar. 10 Apr. 10 May 10 June 10 211.98 195.46 218.95 235.97 235.86 255.96 July 10 Aug. 10 Sep. 10 Oct. 10 Nov. 10 Dec. 10 246.94 260.09 258.77 294.07 317.13 317.44 Calculate to the nearest 0.01% your monthly percentage return (on a simple interest basis) if you had bought Apple stock in August and sold in October. r= 78.38 X %