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02-03-2020
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LCB Inc. has a 6% 20-year maturity $1,000 par value bond that currently has a yield to maturity of 7.5%. How much does LCB pay in annual interest on one of these bonds?

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andromache andromache

03-03-2020

Answer:

$60

Explanation:

Data provided in the question

Yield to maturity = 7.5%

Time period = 20 years

Par value = $1,000

Annual interest Rate = 6%

Now the annual interest rate is

= Par value × annual interest rate

= $1,000 × 6%

= $60

In order to find out the annual interest rate , we multiplied the par value with the annual interest rate

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