A $20,000 municipal bond is offered for sale at $18,000. The bond interest rate is 6 percent per year payable semiannually. The bond will mature and be redeemed at face value 5 years from now. If you purchase the bond, the first premium you will receive is 6 months from today. You have decided that you will invest $18,000 in the bond if your effective semi-annual yield is at least 4 percent. What effective semi-annual rate will this investment yield?
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Home » Business » A $20,000 municipal bond is offered for sale at $18,000. The bond interest rate is 6 percent per year payable semiannually. The bond will mature and be redeemed at face value 5 years from now.