Interest yields

Hathi

5% treasury stock. Current market price £110 over 4 years.
I am having trouble trying to work out
Investment A pays interest of 1.7% every 3 months.
The answer is 6.975.
Please can everyone explain

crispy

Hello,

1.017^4 = 1.06975
1.06975 - 1 = 0.06975
0.06975 * 100 = 6.975 %

The ^ sign represents to the power of, as the investment is paying every 3 months (each quarter) there will be 4 payments.

Hope this helps.

Hathi

Thank you