Four years ago, Valero issued $5 million worth ofdebenture

Chapter 7, Problem 7.49

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Four years ago, Valero issued $5 million worth ofdebenture bonds having a bond interest rate of 10%per year, payable semiannually. Market interestrates dropped and the company called the bonds(i.e., paid them off in advance) at a 10% premiumon the face value. What semiannual rate of returndid an investor make who purchased one $5000bond 4 years ago and held it until it was called4years later?

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