The closing price of a U.S. Treasury bond with a face value of $1000 is quoted as 105.97 points, for a current yield of 3.7%. If you buy this bond, how much annual interest will you receive? Round answer to nearest cent.

To calculate the annual interest you will receive from the bond, you can use the following formula:

\[
\text{Annual Interest} = \text{Current Yield} \times \text{Purchase Price}
\]

1. **Determine the Purchase Price**:  
   The bond price is quoted at **105.97 points**, which means the bond is selling at 105.97% of its face value. The face value is **$1000**, so the purchase price is:

   \[
   \text{Purchase Price} = 1000 \times \frac{105.97}{100} = 1059.70
   \]

2. **Apply the Current Yield**:  
   The current yield is given as **3.7%**. So, the annual interest is:

   \[
   \text{Annual Interest} = 1059.70 \times \frac{3.7}{100} = 39.2089
   \]

   Rounded to the nearest cent:

   \[
   \text{Annual Interest} = 39.21
   \]

Thus, the annual interest you will receive is **$39.21**.

Would you like further details or have any questions?

Here are 5 related questions:
1. What is the difference between coupon yield and current yield?
2. How does bond pricing fluctuate with interest rates?
3. What factors affect the current yield of a bond?
4. How is yield to maturity different from current yield?
5. What happens to the bond's value as it approaches maturity?

**Tip:** Always distinguish between a bond's purchase price and its face value when calculating yields and interest payments.

Learn how to calculate the annual interest from a U.S. Treasury bond quoted at 105.97 points with a current yield of 3.7%. This step-by-step solution includes calculating the purchase price and applying the current yield. Suitable for students in Grades 10-12.

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