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Question
A bank is going to issue $5,000,000 in 10-year par value bonds that pay a 6% annual coupon. The bank must pay .5% of the face value in floatation costs. What is the bank's effective cost of borrowing?a. 5.9%
b. 6.1%
c. 6.3%
d. 6.5%
e. 6.7%
Answer
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