. A corporate note is bought on 5/3/2005 and matures to $4000 on 5/9/2005. On
5/7/2005 this note is sold to a third party requiring 7%. Find the amount the
third person paid for the corporate note. Find the actual interest the original
holder lost on his investment.
The third person paid:
Current value of note:
Assume it is X, so, grow X for six months to give you $4,000
Price paid by third person:
Third person paid $ 3,495.
Total actual interest as at selling date.
Total interest=4,000-3,266=$734
Interest lost= accumulated- on selling
Interest lost is $260
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