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When a certain type of bond matures, the bondholder is subject to a tax of 25% on the amount of discount at which she or he bought the bond. A 1; 000 bond of this type has coupons of 4% per year payable semi-annually and is redeemable at par in 10 years. No tax is payable on the coupons. What price should a purchaser pay to realize an annual yield of 6% after taxes?

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Category:- Basic Finance
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