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BOND

by bburton11 » Tue Jun 23, 2009 5:20 am
Last year a certain bond with a face value of $5,000 yielded 8 percent of its face value in interest. If that interest was approximately 6.5 percent of the bond’s selling price, approximately what was the bonds selling price?

$4,063
$5,325
$5.351
$6,000
$6,154
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by ssmiles08 » Tue Jun 23, 2009 5:32 am
I think the key here is to read the question and translate it carefully.

1st sentence, they give you the interest. 5000*8/100 = 400

2nd sentence, they use that same interest in deriving something else.

400 = .065(selling price)

selling price ~ $6,150 which is closest to (E)
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by pops » Tue Jun 23, 2009 8:41 pm
let SP be x
so 6.5% of x = 8% of 5000
x = 8*5000/6.5 ~ 6154
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