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Question
A bank is going to issue $10,000,000 in 5-year par value bonds that pay a 5% annual coupon. The bank must pay .7% of the face value in floatation costs. What is the bank's effective cost of borrowing?a. 5.0%
b. 5.2%
c. 5.7%
d. 6.2%
e. 7.5%
Answer
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