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As of April 1, 1998, your broker offers you a municipal bond with the following characteristics: Deadline: March 31, 2005 Coupon rate: 6% Required rate
As of April 1, 1998, your broker offers you a municipal bond with the following characteristics:
Deadline: March 31, 2005 Coupon rate: 6% Required rate of return: 8% Nominal Value: 1000
What average annual return do you realize on this investment if you expect to be able to reinvest the coupons at a rate of 6% and you plan to keep the municipal bond until the end of June 2003?
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