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A municipal bond has a face value of $1000. Interest of $35 is paid every 6 months. The bond has a life of 10 years.

A municipal bond has a face value of $1000. Interest of $35 is paid every 6 months. The bond has a life of 10 years. What is the effective rate of interest on this bond? Is this rate adjusted for inflation? What is the municipal governments cost of capital for this bond? Estimate the rate, considering all levels of government.

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