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When a certain type of bond matures, the bondholder is subject to a tax of 30% on the amount of discount at which she bought
When a certain type of bond matures, the bondholder is subject to a tax of 30% on the amount of discount at which she bought the bond. A 1000 bond of this type has 4% annually paid coupons and is redeemable at par in 10 years. No tax is paid on coupons. What price should a purchaser pay to realize an effective annual yield of 5% after taxes?
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