A par value bond offers a coupon rate of 7 percent with semiannual interest payments.The effective annual rate provided by these bonds must be:
A) equal to 3.5 percent.
B) greater than 3.5 percent but less than 4 percent.
C) equal to 7 percent.
D) greater than 7 percent but less than 8 percent.
E) equal to 14 percent.
Correct Answer:
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