On April 1, 2020, a Company Sold $3,500,000 of Ten

question 16

Multiple Choice

On April 1, 2020, a company sold $3,500,000 of ten year, 6% bonds for $2,222,400. From the proceeds, the company paid $200,000 sales commission. Interest is payable semi-annually on April 1 and October 1. What is the effective rate of interest (round to 2 decimal places) ?

• A)6.25%
• B)6.98%
• C)9.81%
• D)11.46%

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Definitions:

RRSP

The Registered Retirement Savings Plan (RRSP) is a Canadian investment vehicle for individuals to save for retirement, with contributions being tax-deductible and growth being tax-deferred.

Prison Population

The total number of individuals incarcerated in a prison system at a given time.

Decreasing Rate

A situation where the rate at which a value or quantity is reduced increases over time.

Canada Savings Bond

A secure investment product offered by the Government of Canada that provides a guaranteed interest rate over a fixed period.