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Question
Omega Inc. holds a 12-year bond that has a 12 percent coupon rate and a marginal tax rate of 40 percent. It is currently selling for $1,000, which is the bond's face value. If interest is paid semiannually, the bond's yield to maturity is:
a. equal to 12 percent.
b. greater than 12 percent.
c. less than 12 percent.
d. equal to 7.2 percent.
e. greater than 16.8 percent.
Answer
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