What is the effective yield

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Question: (a) Suppose a 12-percent $1,000 bond with 7 years left to maturity is selling for $1,208.25. What is the effective yield, assuming that interest is paid annually?

(b) If, in part (a), interest were paid semi-annually, what would the bond sell for, given that the effective yield remained unchanged?

Reference no: EM131748690

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