Farm Fresh Corporation just issued a bond with a coupon rate of 7 percent and semiannual...

Question

Question

business finance

Answer 1

Answer #1

As the bonds are priced at par, coupon rate will be equal to the annual rate which is 7%,

The effective rate is:-

=(1+r/n)^n1-

=(1+7%/2)^2-1

=7.12%

Thus the answer is greater than 7 percent

Answer 2

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