Suppose the U.S. Treasury offers to sell you a bond for $687.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?
A. 6.00%
B. 8.96%
C. 7.24%
D. 6.39%
E. 7.79%
Answer: E
Business
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