Answer :
The interest rate that is being given is 6.4%, considering purchase and redemption price of bond, So, the correct option is (d).
Given information:
Purchase price of bond = $940
Buy back price of bond = $1,000
Interest received by bondholder = $1,000-$940 = $60
Rate of interest on bond = $60/$940*100 = 6.38% or 6.4%
Bonds are fixed-income securities that reflect payments from creditors to borrowers . A bond can be compared to an agreement detailing the conditions of the loan and the accompanying payments between both the lender and borrower. Companies, municipalities, counties, and political entities utilize bonds to help fund operations and projects. Bondholders are the issuer's debtors or creditors.
The bondholder receives the difference between issue price and redemption price as the interest on bonds.
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