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A $5000 municipal bond is offered for sale. It will provide 8% annual interest by...

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Accounting

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A $5000 municipal bond is offered for sale. It will provide 8% annual interest by paying $200 to the bondholder every six months. At the end of ten years, the $5000 will be paid to the bondholder along with the final $200 interest payment. If you consider 12% nominal annual interest, compounded semiannually, an appropriate bond yield, the amount you would be willing to pay for the bond is closest to: a. $2750 b. $3850 c. $5000 d. $7400

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