Question

Timothy periodically purchases bonds issued by Prince Waste Collection. Last year, he bought two bonds in February, two bonds in June, and one bond in August, then sold them all in October. Prince Waste Collection bonds were selling at 94.593 in February, 92.661 in June, 105.480 in August, and 102.882 in October. If each bond that Timothy bought had a par value of $1,000, how much profit did he make from buying and selling these bonds?
a.
$15.91
b.
$34.42
c.
$159.12
d.
$344.22

Answer 1

He bought 2 bonds at 94.593 → 2 × $945.93 = $1,891.86
2 bonds at 92.661 → 2 × $926.61 = $1,853.22
1 bond at 105.480 → 1 × $1,054.80 = $1,054.80
Total cost = $4,799.88

He sold 5 bonds in October at 102.882 → 5 × $1,028.82 = $5,144.10

Profit = $5,144.10 − $4,799.88 = $344.22

Answer: d. $344.22