Interest yields

Hathi
Hathi Registered Posts: 2 New contributor ?
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

Comments

  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?
    edited June 2023
    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
    Hathi Registered Posts: 2 New contributor ?
    Thank you
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