A bond is sold at a face value of $200

Question

with an annual yield of 3%
. How much will the bondholder have received in payment from the bond issuer after the bond has reached its maturity date of one year?(1 point)
Responses

$6
6 dollars

$200
200 dollars

$206
206 dollars

$406

Answer 1

To calculate the total amount a bondholder will receive at maturity, you need to consider both the face value of the bond and the interest earned over the year.

Here, the bond has a face value of $200 and an annual yield (interest) of 3%.

1. Calculate the interest earned on the bond: \[ \text{Interest} = \text{Face Value} \times \text{Yield} = 200 \times 0.03 = 6 \text{ dollars} \]

2. Add the interest to the face value: \[ \text{Total Payment} = \text{Face Value} + \text{Interest} = 200 + 6 = 206 \text{ dollars} \]

Thus, after the bond reaches its maturity date of one year, the bondholder will have received $206.

The correct response is: $206.