Answer:
The answer is 6.94%
Explanation:
Semiannual coupon payment makes payment twice in a year.
The effective rate is the real return on any interest-paying investment(e.g bonds) when the effects of compounding over time are taken into account
Effective rate = (1 + YTM/n)^n - 1
YTM is 6.82 percent
n is 2( since it s a semiannual)
Effective rate = (1 + 0.0682/2)^2 − 1 =
(1 + 0.0341) ^2 - 1
1.0341^2 - 1
1.0694 - 1
0.694
Expressed as a percentage:
=6.94%
