Interest on Bonds
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Assume all bonds are $1,000 par value. A person buys a 5 year, $1,000 certificate of deposit that carries a nominal rate of 9%, compounded semiannually. 6 months after this purchase, a 4 1/2-year CD at the same bank offers a 9.5% annual rate, also compounded semiannually. How much difference is there in total interest paid by the 2 competing investments?
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Solution Summary
The expert examines the interest on Bonds for a person. The total interest paid by the 2 competing investments are determined.
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