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A municipality needs funding for upcoming infrastructure (water and sewer line) repair or replacement. They issue a series of $1,000, 6% semiannual, 10-year bonds. The
A municipality needs funding for upcoming infrastructure (water and sewer line) repair or replacement. They issue a series of $1,000, 6% semiannual, 10-year bonds. The bonds are initially sold at a discount for $960.
If you buy a bond and sell it for $850 immediately following the 8th interest payment, what is your effective annual rate of return?
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