Arithmetic Ability
Compound Interest

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Q.

A five-year promissory note with a face value of $3500, bearing interest at 11%  compounded semiannually, was sold 21 months after its issue date to yield the buyer 10% compounded quarterly.What amount was paid for the note

View Answer

Correct choice: A

Explanation:

i=j/m Maturity value = PV(1 + i)^n Term = 5 years - 21 months= 3.25 years Price paid = FV(1+ i ) ^-n
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