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A $10,000 municipal bond has an interest rate of 6% per year, compounded semiannually. The bond will

A $10,000 municipal bond has an interest rate of 6% per year, compounded semiannually. The bond will mature in 10 years. If the market interest rate is 8% per year compounded semiannually, a person purchasing the bond should be willing to pay:

a. $10,000
b. An amount less than $10,000
c. An amount greater than $10,000
d. The amount cannot be determined from the information that is provided.

SOLUTION