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5-year, $1,000,000 bonds, that pay 10% interest are issued. At the time of issuance, the market rate of interest is 8%. For bondholders, what is
5-year, $1,000,000 bonds, that pay 10% interest are issued. At the time of issuance, the market rate of interest is 8%. For bondholders, what is the effective return on this investment?
a. 2%
b. 8%
c. 10%
d. Cannot be determined based on information given
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