Answer:
The interest rate for this bond is 8% per annum.
Explanation:
Given that,
a bond that costs $1,000 and pays an $80 interest each year.
To find the rate of interest, we use the following formula is
I=Prt
Here P = principal= $1,000
I=interest= $80
t=time= 1 year
∴80 = 1000×r×1
[tex]\Rightarrow r=\frac{80}{1000}[/tex]
⇒r = 0.080
⇒r= 8%
The yield for this bond is 8% per annum.
