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Compute the effective yield with an interest rate

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Reference no: EM131748692

Question: (a) A $1,000, 20-year bond with an interest rate of 14 percent is selling at $1,200. Compute the effective yield.

(b) What is the effective yield if interest of 7 percent ($70) is paid semi-annually (instead of the 14-percent annual payment)?

Reference no: EM131748692

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