If the state sells the bonds at auction and receives 64, Ask an Expert

Economics

Suppose that the state of California plans to spend $1,000,000,000 on a project to restore wetlands next year. This can be financed by taxes this year, or by issuing bonds with a maturity of ten years.

a) If the state sells the bonds at auction, and receives 64 cents (now) for every dollar it will have to repay in ten years, then what's the implied yield (annualized interest rate)?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M965941

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