Solve the Problem $\$ 3,000$ Bond Grows To $\$ 4,475.47$ In 8 Yr Under Continuous Compounding

question 139

Multiple Choice

Solve the problem.
-A $\$ 3,000$ bond grows to $\$ 4,475.47$ in 8 yr under continuous compounding. Find the interest rate. Round our answer to the nearest whole percent.

• A) \(8 \%\)
• B) \(5 \%\)
• C) \(7 \%\)
• D) \(6 \%\)

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Definitions:

Coupon Rates

The interest rate stated on a bond when issued, which represents the annual interest payment compared to the bond's face value.

Effective Rates

Interest rates adjusted for the compounding period, more accurately reflecting the true cost or yield of a financial product than the nominal rate.

Present Value

The present value of a future sum of money or cash flow series calculated with a particular rate of return.

Market Price

The rate for exchanging assets or services in the marketplace currently.