In practice, bonds issued in Australia usually make coupon payments twice a year. So, if an ordinary bond has a coupon rate of 14 per cent, then the owner will get a total of $140 per year, but this $140 will come in two payments of $70 each. Suppose we are examining such a bond. The yield to maturity is quoted at 16 per cent. Bond yields are quoted like APRs; the quoted rate is equal to the actual rate per period multiplied by the number of periods. In this case, with a 16 per cent quoted yield and semiannual payments, the true yield is 8 per cent per six months. The bond matures in seven years. What is the bond’s price?

What is the effective annual yield on this bond?