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Pete bought a 5-year bond with a $7,500 par value at a price of 97.5. The bond pays nominal interest of 5% paid semi-annually. What

Pete bought a 5-year bond with a $7,500 par value at a price of 97.5. The bond pays nominal interest of 5% paid semi-annually. What is the effective annual yield on the bond owned by Pete?

a) 5.06%

b) 5.58%

c) 5.66%

d) 10.12%

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