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What is the effective rate of interest per period on bonds

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Question - On February 1, 20X2, Jelico Inc. issued 20-year, semi-annual bonds that pay interest at 7% per year in the market. On this date, Riku Inc. paid $1,125,000 to acquire $1,000,000 of these newly issued bonds from Jelico. Interest on the bonds is paid semi-annually on July 31 and January 31. Riku intends to hold on to the bonds to receive the semi-annual interest payments.

What is the effective rate of interest per period on the bonds?

a) 2.9625%

b) 3.3644%

c) 3.5000%

d) 3.6430%

Reference no: EM132550717

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