Suppose you have purchased a bond whose face value is $1,000. This bond pays you annually

5% of the face value. If your bought this bond at $1,100, what is the e§ective interest rate for you?

Choose the closest one.

(a) 4%

(b) 4.5%

(c) 5%

(d) 5.5%

5% of the face value. If your bought this bond at $1,100, what is the e§ective interest rate for you?

Choose the closest one.

(a) 4%

(b) 4.5%

(c) 5%

(d) 5.5%