How much will the annual interest payments be

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Question: Owen Meany is considering the purchase of a $1,000 Amity Island Municipal Bond. The city is raising funds for a much-needed advertising campaign to promote its East Coast resort community. The stated coupon rate is 6 percent, paid annually. The bond will mature in 10 years. The YTM for similar bonds in the market is 8 percent.

a. How much will the annual interest payments be?

b. What is the market price of the bond today?

c. Is the interest received on a municipal bond generally tax free?

Reference no: EM131884373

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