Bond with semi-annual coupons

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Bill buys a 10-year 1000 par value 6% bond with semi-annual coupons. Theprice assumes a nominal yield of 6% compounded semi-annually. Bill reinvestseach coupon in a fund paying an effective rate of i%.At the end of 10 years after the final coupon and redemption payment, Bill hasearned an effective yield of 7% on his investment in the bond. What is i?

 

Reference no: EM13963812

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