A Four-Year Promissory Note with a Face Value of $2,000

question 167

Short Answer

A four-year promissory note with a face value of $2,000, bearing interest at 6% compounded quarterly, was sold 1 ½ years after its issue date to yield the buyer 8% compounded monthly. What amount did the buyer pay for the note?

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Definitions:

Monopoly

A market structure characterized by a single seller who has exclusive control over a product or service.

Antitrust Law

Legal regulations designed to promote fair competition for the benefit of consumers, by preventing monopolies, cartels, and other practices that restrain free trade.

Interstate Commerce

Trade, traffic, or transportation involving the movement of goods or people across state lines, regulated by federal law.

Professional Baseball

A sport involving organized teams and leagues, recognized at a professional level for its athletes who are paid to play.