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Interest payments and bond prices are stated as percentages of par 1% or 1 point for a bond = $10.00 An 1/8 of a point

Interest payments and bond prices are stated as percentages of par

  • 1% or 1 point for a bond = $10.00
  • An 1/8 of a point for a bond = $1.25

Mrs. Smith owns a 5% bond; this means that she receives $50 per year in interest. She paid a price of 118 for the bond. How much is this in dollars?

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