Originally Posted by

**mottin** I asked this question earlier, and i think i sovled it. could someone check it for me please? (sorry i cant do the symbols things)

original question:

Suppose you hold a bond that matures 3 months from today. Upon maturity, the bond pays you $100. The price of the bond is $96.50. What is the nominal interest rate associated with the bond, expressed as a compounded annual rate?

1- find out what the interest rate it (i used the Pert method)

96.5*e^3r=100

e^3r=100/96.5

3r=Ln(100/96.5)

r=.012 more or less

2- using the compounding formula to get the annual rate:

1(1+r)^n

1(1+.012)^12=1.154 more or less...

so the answer would be 15.4% ..? odes this sound right?