Assume that the city of Tampa sold tax exempt (muni), zero coupon bonds 5 years ago The bonds had a 25 year maturity and a maturity value of $1,000 when they were issued, and the interest rate built into the issue was a nominal 10 percent, but with semiannual compounding The bonds are now callable ...

Assume that the city of Tampa sold tax-exempt (muni), zero coupon bonds 5 years ago. The bonds

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Assume that the city of Tampa sold tax-exempt (muni), zero bonds 5 years ago. The bonds had a 25-year and a value of $1,000 when they were issued, and the interest rate built into the issue was a nominal 10 percent, but with semiannual compounding. The bonds are now callable at a premium of 10 percent over the accrued value. What effective annual rate of return would an investor who bought the bonds when they were issued and who still owns them earn if they are called today?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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