Assume a bond sells at 97.75 (pays 8% interest). What is the total interest Micah will receive at the end of each year if he buys four bonds?




To calculate the total interest Micah will receive at the end of each year if he buys four bonds, we can follow these steps:

### Step 1: Determine the Face Value of One Bond
Assume the face value of each bond is $1,000 (which is standard unless stated otherwise).

### Step 2: Calculate the Annual Interest for One Bond
The bond pays 8% interest on its face value. The annual interest for one bond is:

\[
\text{Annual Interest} = \left(\frac{8}{100}\right) \times 1000 = \$80
\]

### Step 3: Calculate the Total Interest for Four Bonds
Since Micah buys four bonds, the total annual interest he will receive is:

\[
\text{Total Annual Interest} = 4 \times 80 = \$320
\]

Thus, Micah will receive **$320** in total interest at the end of each year.

Would you like further details or have any questions?

Here are 8 related questions:

1. How does the purchase price of a bond (e.g., 97.75) affect its yield to maturity?
2. What would be the impact on interest if the bond's coupon rate changes?
3. How would the total interest change if Micah buys more bonds?
4. What is the difference between coupon rate and current yield?
5. How does the bond's market price (e.g., 97.75) relate to its face value?
6. Can you explain how bond interest payments work in general?
7. What factors influence the interest rate offered by a bond?
8. How would a change in interest rates affect the bond's market price?

**Tip:** Always consider the face value of a bond and its coupon rate to accurately calculate interest payments.

Learn how to calculate the total interest Micah will receive at the end of each year if he buys four bonds paying 8% interest. Understand the formula used for interest calculations and its application in bond investments.

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