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# A debenture with a face value of \$100 is selling for \$97. The coupon is 10% pa paid quarterly.

A debenture with a face value of \$100 is selling for \$97.60. The coupon is 10% pa paid quarterly. What is the annual effective yield if the debenture has one and a half years to maturity (provide your answer as a percentage and accuracy to two decimal places)? Show your workings clearly and explain your logic. You must provide one manual calculation of IRR to demonstrate that you understand the process.

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Solution to assignment #2 of diamond6456 (March 25)
1st step, using Excel's RATE() function, compute the quaterly nominal yield:
NPER
PMT
PV
FV
TYPE
GUESS
RATE 6
(\$2.50)
\$97.60
(\$100.00) (This is...

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