Abc corporations recently issued bonds paying interest, Ask an Expert

Economics

ABC Corporation's recently issued bonds paying interest semi-annually and maturing in 10 years. The face value of each bond is $1000, and 6.8% is the nominal interest rate.

(a) What is the effective interest rate an investor receives?

(b) If a 1.5% fee is deducted by the brokerage firm from the initial $1000, what is the effective annual interest rate paid by ABC Corporation?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91295548

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